Was just surfing around on The Bullion Desk website and there are two stories, one after the other:
- Gold to hit fresh record highs in coming months before easing back - BarCap
- Gold to fall to $870/oz on stronger dollar - Saxo Bank
Thursday, December 17, 2009
You gotta love the markets!
I dunno, maybe it's just a traders thing but you have to love the markets. It's the biggest game around and nobody has a clue how it is going to play out.
Was just surfing around on The Bullion Desk website and there are two stories, one after the other:
Was just surfing around on The Bullion Desk website and there are two stories, one after the other:
Thursday, December 10, 2009
Update
Just a quick update on my long USD short ZAR trade. Things have moved in the right direction and I am marginally in the money.
Quite pleased that the Rand is starting to get comfortable below the R7.50 to the US dollar level and it is good to see decent volumes continuing to go through on that USDSCA warrant.
Something that should give a bit of momentum to the weakening of the ZAR will be the hints being offered by the bond market. Foreigners were net sellers of R596m worth of SA bonds on Thursday following up on the R645m sold on Wednesday.
These are the kind of flows likely to indicate that people are starting to pull in their horns and take money back to the developed markets for a while.
According to the guys over at RMB: "RMB analysts said in their daily report that risks of an immediate break
of 7.62 have faded as mixed US data has taken the strength out of the US recovery and global risk-taking is resuming, if slowly."
.... they're bankers and probably wrong.... Personally I wouldn't be surprised to have a decent sell-off going into December - particularly with concerns around structural problems in places like Greece, Spain, Ireland etc.
A great number of out of China with November Industrial Output up 19.2% - well above economist expectations. The recovery seems to be taking hold at all levels of the economy which is very encouraging for longer term investment stability
Anyways - I have a good feeling about today. Let's see what the day holds.
Quite pleased that the Rand is starting to get comfortable below the R7.50 to the US dollar level and it is good to see decent volumes continuing to go through on that USDSCA warrant.
Something that should give a bit of momentum to the weakening of the ZAR will be the hints being offered by the bond market. Foreigners were net sellers of R596m worth of SA bonds on Thursday following up on the R645m sold on Wednesday.
These are the kind of flows likely to indicate that people are starting to pull in their horns and take money back to the developed markets for a while.
According to the guys over at RMB: "RMB analysts said in their daily report that risks of an immediate break
of 7.62 have faded as mixed US data has taken the strength out of the US recovery and global risk-taking is resuming, if slowly."
.... they're bankers and probably wrong.... Personally I wouldn't be surprised to have a decent sell-off going into December - particularly with concerns around structural problems in places like Greece, Spain, Ireland etc.
A great number of out of China with November Industrial Output up 19.2% - well above economist expectations. The recovery seems to be taking hold at all levels of the economy which is very encouraging for longer term investment stability
Anyways - I have a good feeling about today. Let's see what the day holds.
Saturday, December 5, 2009
The most important part of trading is to make money
I was over at Ickos' Alsi-Trader blog and came across a pretty recent post from him about "Becoming a better trader".
One of the comments that he made was: "To become a profitable trader one must invest time. First on to do list is to read as many books as one can."
My personal opinion is that this idea of becoming a good, better, best trader is questionable at the best of times and the one thing that is more important than reading books is to make a profit and retain it!
Simple example - a trader starts with R1000 - he makes a 15% profit - what does he do with that profit?
A) Bank it and trade up with R1150 next time?
B) Put the profit in the bank?
C) Invest the profits in an index tracker or a blue chip share?
D) Put their profits into their bond and settle debt / grow other asset classes?
To me, knowing how you are going to protect your profits is something only you can learn and decide and too often it is left till last in order of importance while traders pursue larny systems.
I'm a big believer that many traders spend way too much devising, back-testing and developing systems and spend far too little time working out how they are going to protect
How many traders are cussing and cursing that they were stopped out of long gold trades on Friday? (Or will be on Monday). I am pretty sure that few people or systems could fault you being long gold until WHAM! that jobs number comes out and you are blown out the water.
(Yes you should remember the rule that it is dangerous to trade around data but if that were the case then most of you would be out the market 75% of the time.)
No trading system in the world is going to protect you from random events (9/11 for example or a "whopping" jobs number) - but you can certainly protect yourself by making sure you know what you are going to do with your profits as you make them.
THE POINT OF TRADING IS TO MAKE MONEY - IF YOU DON'T KNOW WHAT THE SCORE IS THEN YOU'RE A GAMBLER.
One of the comments that he made was: "To become a profitable trader one must invest time. First on to do list is to read as many books as one can."
My personal opinion is that this idea of becoming a good, better, best trader is questionable at the best of times and the one thing that is more important than reading books is to make a profit and retain it!
Simple example - a trader starts with R1000 - he makes a 15% profit - what does he do with that profit?
A) Bank it and trade up with R1150 next time?
B) Put the profit in the bank?
C) Invest the profits in an index tracker or a blue chip share?
D) Put their profits into their bond and settle debt / grow other asset classes?
To me, knowing how you are going to protect your profits is something only you can learn and decide and too often it is left till last in order of importance while traders pursue larny systems.
I'm a big believer that many traders spend way too much devising, back-testing and developing systems and spend far too little time working out how they are going to protect
How many traders are cussing and cursing that they were stopped out of long gold trades on Friday? (Or will be on Monday). I am pretty sure that few people or systems could fault you being long gold until WHAM! that jobs number comes out and you are blown out the water.
(Yes you should remember the rule that it is dangerous to trade around data but if that were the case then most of you would be out the market 75% of the time.)
No trading system in the world is going to protect you from random events (9/11 for example or a "whopping" jobs number) - but you can certainly protect yourself by making sure you know what you are going to do with your profits as you make them.
THE POINT OF TRADING IS TO MAKE MONEY - IF YOU DON'T KNOW WHAT THE SCORE IS THEN YOU'RE A GAMBLER.
And we're off!
I'm still trying to get my head around that US jobs number but I guess I'll take what comes - it looks like the jobs are finally starting to come through in the US economy.
The dollar started to bounce back and that burnt the gold and platinum prices on Friday - it will be interesting to see what impact that has on SA shares during the next week. If foreigners decide to lighten some of their SA holdings we might see the Rand come under a bit of pressure.
Rand slipped to R7.46 vs the US $ on Friday and a move through the R7.50 mark could be quite telling. I see it has subsequently strengthened a bit at the end of the trading day to R7.41.
Like I said in my previous - I still the dollar offers some of the best opportunities for traders over the December / January period.
The dollar started to bounce back and that burnt the gold and platinum prices on Friday - it will be interesting to see what impact that has on SA shares during the next week. If foreigners decide to lighten some of their SA holdings we might see the Rand come under a bit of pressure.
Rand slipped to R7.46 vs the US $ on Friday and a move through the R7.50 mark could be quite telling. I see it has subsequently strengthened a bit at the end of the trading day to R7.41.
Like I said in my previous - I still the dollar offers some of the best opportunities for traders over the December / January period.
Saturday, November 28, 2009
Ouch
Well that Dollar / Yen trade was an almighty screw up and I am suitably poorer for my efforts.
I still think in the long-term (3 to 4 months) the trade is the right one but having been stopped out twice in the last few weeks I've had my fill of this particular currency play.
That doesn't mean I've moved my attention away from the currency market and I've used some of these new Standard Bank Currency Reference Warrants to go long the US Dollar against the South African Rand.
One of the fallouts I would expect to see courtesy of Dubai is some money being pulled out of emerging markets and parked off in in things like the US Dollar - particularly as Christmas rolls around.
If one looks at the US dollar call (USDSCA) there seem to be quite a lot of people taking bets that the rand is going to weaken from these levels. Of the last 7 trading days 4 have had trade in excess of 2.3m which is not bad for an instrument which is only 2 weeks old.
I also bailed on my Sasol call after my stop-loss was breached - the warrant was decaying too fast and my sense is that investors are not going to rush to bid up emerging market shares over the next 30 days.
I still think in the long-term (3 to 4 months) the trade is the right one but having been stopped out twice in the last few weeks I've had my fill of this particular currency play.
That doesn't mean I've moved my attention away from the currency market and I've used some of these new Standard Bank Currency Reference Warrants to go long the US Dollar against the South African Rand.
One of the fallouts I would expect to see courtesy of Dubai is some money being pulled out of emerging markets and parked off in in things like the US Dollar - particularly as Christmas rolls around.
If one looks at the US dollar call (USDSCA) there seem to be quite a lot of people taking bets that the rand is going to weaken from these levels. Of the last 7 trading days 4 have had trade in excess of 2.3m which is not bad for an instrument which is only 2 weeks old.
I also bailed on my Sasol call after my stop-loss was breached - the warrant was decaying too fast and my sense is that investors are not going to rush to bid up emerging market shares over the next 30 days.
Yeah!
These are the kind of analysts I'm talking about:
Danielle Chiesi - the analyst who sunk Galleon!
Danielle Chiesi - the analyst who sunk Galleon!
Monday, November 23, 2009
Comments on ABL
African Bank Investments Limited (Abil) for me has long been a popular choice in my investment portfolio. They're a good dividend payer (both the ords and the prefs) and they are one of the few financial services stocks who have really good growth prospects over the next two to four years.
I have read quite a lot of commentary today about how Ellerines is an albatross around the neck of Abil and how it is likely to continue to hurt them.
Don't get me wrong - in hindsight they have overpaid for the asset but just look at this for a moment and let's try and work this out.
As things stand revenue breaks down like this
That revenue line in these results is the key. A business that can generate R15bn in revenue - primarily cash can do whatever the hell it likes.
Have a look at the capital raisings that the bank has undertaken this year. I think it raised about R800m over the last 12-months.
In credit markets which have been squeezed that is not a bad going. In a business of this nature, if you can generate cash the funding (and cost of funding) will ultimately play ball.
Another key aspect for me is that the Ellerines they bought and the Ellerines they are trying to build are two very different animals. The group has admitted they have made mistakes and they've done things about it.
Instead of standing around and letting it fail they've attacked the problem and they are trying to address some of the challenges they are facing. If you have seen some of the plans around simplying the whole retail offering you will know that there is a strategy they are trying to execute.
The other point I would like to try and get across is that I don't believe Abil are trying to be furniture salesmen competing with the mainstream retailers. My sense is they would like a functional and workmanlike retail offering but stick to the business of lending - and managing the risk of lending
Conclusion
Maybe the ordinary shares are a little expensive at current levels (if you have a short-term investment outlook) but I don't think you can go too far wrong adding a few of the Abil preference shares to your portfolio.
I have read quite a lot of commentary today about how Ellerines is an albatross around the neck of Abil and how it is likely to continue to hurt them.
Don't get me wrong - in hindsight they have overpaid for the asset but just look at this for a moment and let's try and work this out.
As things stand revenue breaks down like this
- African Bank - R7.4bn
- Ellerines - R6.9bn
That revenue line in these results is the key. A business that can generate R15bn in revenue - primarily cash can do whatever the hell it likes.
Have a look at the capital raisings that the bank has undertaken this year. I think it raised about R800m over the last 12-months.
In credit markets which have been squeezed that is not a bad going. In a business of this nature, if you can generate cash the funding (and cost of funding) will ultimately play ball.
Another key aspect for me is that the Ellerines they bought and the Ellerines they are trying to build are two very different animals. The group has admitted they have made mistakes and they've done things about it.
Instead of standing around and letting it fail they've attacked the problem and they are trying to address some of the challenges they are facing. If you have seen some of the plans around simplying the whole retail offering you will know that there is a strategy they are trying to execute.
The other point I would like to try and get across is that I don't believe Abil are trying to be furniture salesmen competing with the mainstream retailers. My sense is they would like a functional and workmanlike retail offering but stick to the business of lending - and managing the risk of lending
Conclusion
Maybe the ordinary shares are a little expensive at current levels (if you have a short-term investment outlook) but I don't think you can go too far wrong adding a few of the Abil preference shares to your portfolio.
Friday, November 20, 2009
Long dollar, short yen
Anybody who has been following my Twitter feed over the last week will know that I have been yapping on and on about the US dollar being the only place to be for December.
More specifically - long dollar short yen.
Now given what has and still is happening to the US dollar over the last 12 months, most of you are probably looking at me a little cross-eyed and wondering if I have taken my medication this morning... but hear me out.
I like the dollar going into December for a couple of reasons:
1. Say what you like about it, it will ultimately a defensive hard asset over the long run
2. Asia is stressing about their exports, at some point they are going to start putting pressure on their govts. to weaken many of their currencies to try and resucitate their export market
3. Singapore and Korea are now talking about trying to limit capital flows into their markets. Taiwan last week banned foreign investors from placing funds in time deposits on concern about currency speculation. Plenty of asset managers have been talking up the Asian currencies for a while now. Do they have the capacity to keep taking these inflows in the short-term? I don't think so.
4. Its a volume game - the two currencies who can genuinely absorb major inflows - the dollar and the yen (I'll touch on the yen now now).
5. Equity markets have run hard and there is a general sense that maybe its time to take something off the table and re-evaluate into the new year. Where are you going to park that cash?
Just for shits and giggles I am reading an article at this very moment about them evacuating people in "flood-hit Britain" - Mud Island is sinking into the sea ----> FACT
Which brings me to the Yen. The yen at 88.80 to the dollar is BAD news for Japan. A look at the Nikkei vs. Dow and S&P shows you that it the currency is doing Japanese companies no favours. In my opinion it won't move much lower and people will be looking for an excuse to buy the dollar over the yen in the short-term.
So long dollar, short yen and long Sasol are my only open positions at the moment.
More specifically - long dollar short yen.
Now given what has and still is happening to the US dollar over the last 12 months, most of you are probably looking at me a little cross-eyed and wondering if I have taken my medication this morning... but hear me out.
I like the dollar going into December for a couple of reasons:
1. Say what you like about it, it will ultimately a defensive hard asset over the long run
2. Asia is stressing about their exports, at some point they are going to start putting pressure on their govts. to weaken many of their currencies to try and resucitate their export market
3. Singapore and Korea are now talking about trying to limit capital flows into their markets. Taiwan last week banned foreign investors from placing funds in time deposits on concern about currency speculation. Plenty of asset managers have been talking up the Asian currencies for a while now. Do they have the capacity to keep taking these inflows in the short-term? I don't think so.
4. Its a volume game - the two currencies who can genuinely absorb major inflows - the dollar and the yen (I'll touch on the yen now now).
5. Equity markets have run hard and there is a general sense that maybe its time to take something off the table and re-evaluate into the new year. Where are you going to park that cash?
Just for shits and giggles I am reading an article at this very moment about them evacuating people in "flood-hit Britain" - Mud Island is sinking into the sea ----> FACT
Which brings me to the Yen. The yen at 88.80 to the dollar is BAD news for Japan. A look at the Nikkei vs. Dow and S&P shows you that it the currency is doing Japanese companies no favours. In my opinion it won't move much lower and people will be looking for an excuse to buy the dollar over the yen in the short-term.
So long dollar, short yen and long Sasol are my only open positions at the moment.
Friday, November 13, 2009
A whole lot of nothing
A week which opened up a little nervous but ultimately ended green.
The JSE Top40 (J200) opened at 23730 and finished at 24075 helped by a bit of a bounce in banks and industrials (SAB and RCH). For the rest it was a case of going nowhere fast.
Portfolio changes:
Sasol seems to have built a nice base around the R290 mark (Friday close as well as warrant strike). IMP on the other hand has broken below R170 (the warrant strike) and coupled with the safety issues and the drop off in production - it maybe needs to do a few things right to tempt me back.
Having said that trade in both warrants was brisk over the week and for investors with a bit of risk appetite, they both seem to be an option.
The JSE Top40 (J200) opened at 23730 and finished at 24075 helped by a bit of a bounce in banks and industrials (SAB and RCH). For the rest it was a case of going nowhere fast.
Portfolio changes:
- Sold out of my long IMP call on Wednesday (IMPSBC) for a marginal profit - time decay was starting to bite into the warrant despite being in the money
- Switched into a long on SOL (again SOLSBG)
Sasol seems to have built a nice base around the R290 mark (Friday close as well as warrant strike). IMP on the other hand has broken below R170 (the warrant strike) and coupled with the safety issues and the drop off in production - it maybe needs to do a few things right to tempt me back.
Having said that trade in both warrants was brisk over the week and for investors with a bit of risk appetite, they both seem to be an option.
Thursday, November 12, 2009
Classics!
I just got mailed these two and thought they were brilliant for a laugh:
THE LLOYD`s Prayer
Our Chairman,
Who Art At Goldman,
Blankfein Be Thy Name.
The Rally`s Come. God`s Work Be Done
On Earth As There`s No Fear Of Correction.
Give Us This Day Our Daily Gains,
And Bankrupt Our Competitors
As You Taught Lehman and Bear Their Lessons.
And Bring Us Not Under Indictment.
For Thine Is The Treasury,
The House And The Senate
Forever and Ever.
Goldman.
and then a truly beautiful poem:
Loves the sensation
caused by temptation
A guy sticks his location
in a girls destination
to increase the population
of the next generation
Do you understand my explanation
or do u need a demonstration
THE LLOYD`s Prayer
Our Chairman,
Who Art At Goldman,
Blankfein Be Thy Name.
The Rally`s Come. God`s Work Be Done
On Earth As There`s No Fear Of Correction.
Give Us This Day Our Daily Gains,
And Bankrupt Our Competitors
As You Taught Lehman and Bear Their Lessons.
And Bring Us Not Under Indictment.
For Thine Is The Treasury,
The House And The Senate
Forever and Ever.
Goldman.
and then a truly beautiful poem:
Loves the sensation
caused by temptation
A guy sticks his location
in a girls destination
to increase the population
of the next generation
Do you understand my explanation
or do u need a demonstration
Monday, November 2, 2009
Snigger...
I don't know where this comes from but I see it posted on the Page88 site and I had to laugh at it:
- The Economy, How Bad Is It....
- The economy is so bad... that I got a pre-declined credit card in the mail.
- The economy is so bad.... I ordered a burger at McDonalds and the kid behind the counter asked, "Can you afford fries with that?"
- The economy is so bad... that CEO`s are now playing miniature golf.
- The economy is so bad... if the bank returns your check marked "Insufficient Funds," you call them and ask if they meant you or them.
- The economy is so bad.... Hot Wheels and Matchbox stocks are trading higher than GM.
- The economy is so bad... parents in Beverly Hills fired their nannies and learned their children`s names.
- The economy is so bad... a truckload of Americans was caught sneaking into Mexico .
- The economy is so bad... Dick Cheney took his stockbroker hunting.
- The economy is so bad... Motel Six won`t leave the light on anymore.
- The economy is so bad... the Mafia is laying off judges.
- The economy is so bad... Blue Cross laid off 20 Congressmen and Morgan Stanley laid off 10 more.
Wednesday, October 28, 2009
Platinum
The precious metals took a bit of a thumping yesterday and you had gold flirting with $1030 and platinum as low as $1303.
Impala Platinum got sold off a bit as the metals prices fell but at R168 a share its not far off the R170 strike of that warrant so it doesn't worry me too much - especially as there is still time to run on it.
I've taken two other positions in late trade yesterday.
1. Long platinum at $1308
2. Long Dow - 9775
I wouldn't be surprised to see platinum bounce back to that $1340 price in the near term and the Dow, while looking expensive to some analysts also doesn't seem to have the inclination to fall hard and fast. If the Dow had another run at the 10000 mark I'd probably cash out and see if we consolidate at these levels.
Impala Platinum got sold off a bit as the metals prices fell but at R168 a share its not far off the R170 strike of that warrant so it doesn't worry me too much - especially as there is still time to run on it.
I've taken two other positions in late trade yesterday.
1. Long platinum at $1308
2. Long Dow - 9775
I wouldn't be surprised to see platinum bounce back to that $1340 price in the near term and the Dow, while looking expensive to some analysts also doesn't seem to have the inclination to fall hard and fast. If the Dow had another run at the 10000 mark I'd probably cash out and see if we consolidate at these levels.
Tuesday, October 20, 2009
Call update
Just a quick note - on Tuesday Impala Platinum rose by 1.85% to R166 after earlier in the day after hitting a high of R168.49 earlier in the day.
A quick look at trade in the US ADR has IMP trading at around R168.50 if the present Rand / Dollar exchange rate is used (R7.40).
There was a bit of a pickup in trade in my prefered call warrant IMPSBC with 469235 warrants trading hands and the warrant rising 3c to 27c - admittedly it didn't trade particularly much in the latter part of the day when IMP gave up some of its gains.
Last week I said I thought the dollar would bounce back against the Rand and it seems to have done so - albeit slowly and this is proving a positive boost for the rand hedge stocks listed on the JSE.
Long AUD
Speaking of currency related developments I picked up a currency trade via my Global Trader account which seemed to make sense to me.
This week we take a look at the Australian Dollar (AUD) a currency that has come up three times in our past reports and has continued to strengthen on the back of firmer Gold prices and the carry trade. The Reserve Bank of Australia (RBA) became the first central bank to increase interest rates this year, by increasing their cash target rate from 3.00% to 3.25% on 6 October. This increase took the market by surprise, as most analysts had expected the RBA to keep interest rates unchanged.
The question in most investor’s minds at the moment is will the AUD continue to strengthen against the greenback, or is the greenback oversold at these levels. We, however, continue to be bullish on the AUD as the currency continues to be backed by relatively stronger fundamentals than its peers. Year on year unemployment levels in Australia declined from 5.8% to 5.7% in September 2009, as the Australian economy continues to strengthen on the back of anticipated increase in demand from the Asian markets. Australia’s trade balance however continues to show a different picture as the trade deficit continues to remain relatively high, as it was recorded at $AUD1.5 billion in August. Australia continues to provide investors with higher yields for their investments.
The AUD is currently trading at its 52 week high at 0.9265 to the Dollar. We anticipate the AUD to continue its strong run against the Dollar with our eyes firmly fixed on the 0.95 resistance level. The AUD should continue trading firmer with 0.935 as the first resistance level and followed by 0.95 as the next level. On the down side we expect the currency to find support at 0.90 and then 0.88.
Their recommendation was long AUD vs USD at 0.92 with a stop at 0.90 and a take profit level at 0.935 which I will follow and see what result it produces.
Friday, October 16, 2009
Saturday morning review
Two quick themes I want to look at again on this bright and cheerful Saturday morning
First up is the power of dividends and the old fashioned "buy and hold"
It has many detractors as a way to wealth but I was sitting here this morning watching the dividend notifications flow into the various portfolios we old and the passive portfolios holding the likes of Sasol, Discovery and FirstRand were nicely topped up this morning.
It is a theme I have repeated a couple of times - if you are getting into investing or simply trying to accumulate a nest-egg, then good old fashioned accumulation of good quality stocks with good dividend track records is hard to beat over the long run.
I was having a look at our old family trust account and it always amazes me in terms of return for us. It comprises 8 core stocks (ATN, PWK, SOL, NPN, MTN, BTI, REM, BVT and SBK) and every quarter I check back to it and I find that it has generated another R10000 in passive dividends.
I use R10k as a measure rather than percentage returns because for that portfolio, after it reaches R10k it will then begin to look at re-investing these funds.
Powerful stuff not to be understimated despite all the trading mumbo-jumpo that goes on.
Sasol and Impala
I exited my long position on Sasol yesterday on the back of a nice run up in the share and saw a handy profit. Could it go up more? Probably - but that's why we old the underlying shares in the portfolio to benefit from that upside. The leveraged position was there to give our portfolios a little something extra.
Anyone following my Twitter feed will know that after cashing out of Sasol I went long Impala Platinum after it was down about 2% on the day... didn't work out ideally after it got smacked down more than 4% in total but I remain long.
IMP had a very scratchy September with (correct me if I am wrong) but I think they had 3 fatalities - something which is being focused on by a lot by the industry and of course the media. But if you are pragmatic about these things then you also have to recognise that it re-focuses management on operational problems which in turn (one hopes) flows through to a better run platinum business.
I was reading some research out RMB Morgan Stanley released on Friday and this comment by one of their analysts jumped out at me:
"Marking to market, Implats looks more robust: Applying spot values for the rand, PGM and base metals, we estimate that AngloPlat’s NPV would fall 27% to R494, while Implats would fall by 24% to R174. Alternatively, we assess that AngloPlat is pricing in platinum of USD1520/oz or a rand of 8.15/USD. Implats appears more robust, with its NPV pricing in the current spot (R7.40/USD, platinum USD1345.)"
In other words, there is next to no upside being priced into IMP at the moment... which one would assume means its ripe for those cheesy brokers and analysts to start pumping up their "overweight" and "buy" recommendations.
Which brings me to what I think could be drivers for a focusing in on the platinum sector in the next 3 months which will boost the IMP share price:
First up is the power of dividends and the old fashioned "buy and hold"
It has many detractors as a way to wealth but I was sitting here this morning watching the dividend notifications flow into the various portfolios we old and the passive portfolios holding the likes of Sasol, Discovery and FirstRand were nicely topped up this morning.
It is a theme I have repeated a couple of times - if you are getting into investing or simply trying to accumulate a nest-egg, then good old fashioned accumulation of good quality stocks with good dividend track records is hard to beat over the long run.
I was having a look at our old family trust account and it always amazes me in terms of return for us. It comprises 8 core stocks (ATN, PWK, SOL, NPN, MTN, BTI, REM, BVT and SBK) and every quarter I check back to it and I find that it has generated another R10000 in passive dividends.
I use R10k as a measure rather than percentage returns because for that portfolio, after it reaches R10k it will then begin to look at re-investing these funds.
Powerful stuff not to be understimated despite all the trading mumbo-jumpo that goes on.
Sasol and Impala
I exited my long position on Sasol yesterday on the back of a nice run up in the share and saw a handy profit. Could it go up more? Probably - but that's why we old the underlying shares in the portfolio to benefit from that upside. The leveraged position was there to give our portfolios a little something extra.
Anyone following my Twitter feed will know that after cashing out of Sasol I went long Impala Platinum after it was down about 2% on the day... didn't work out ideally after it got smacked down more than 4% in total but I remain long.
- Upfront let me emphasise that I have always prefered Implats (IMP) over Amplats (AMS)
- I maintain that IMP is run for the benefit of shareholders while AMS is run for the benefit of Anglo American and it is a subtle difference but an important one
- The premium I attach to IMP is that when it has its good years, it rewards shareholders with great dividends and special dividends
- From what I have read almost all of the IMP assets in Zimbabwe have been written down to zero
IMP had a very scratchy September with (correct me if I am wrong) but I think they had 3 fatalities - something which is being focused on by a lot by the industry and of course the media. But if you are pragmatic about these things then you also have to recognise that it re-focuses management on operational problems which in turn (one hopes) flows through to a better run platinum business.
I was reading some research out RMB Morgan Stanley released on Friday and this comment by one of their analysts jumped out at me:
"Marking to market, Implats looks more robust: Applying spot values for the rand, PGM and base metals, we estimate that AngloPlat’s NPV would fall 27% to R494, while Implats would fall by 24% to R174. Alternatively, we assess that AngloPlat is pricing in platinum of USD1520/oz or a rand of 8.15/USD. Implats appears more robust, with its NPV pricing in the current spot (R7.40/USD, platinum USD1345.)"
In other words, there is next to no upside being priced into IMP at the moment... which one would assume means its ripe for those cheesy brokers and analysts to start pumping up their "overweight" and "buy" recommendations.
Which brings me to what I think could be drivers for a focusing in on the platinum sector in the next 3 months which will boost the IMP share price:
- Important factor - South Africa dominates global platinum resources. Any sense that the politics or the operating environment (Electricity) - founded or unfounded - and you will see the platinum price move up
- Lonmin have a dispute with their workers who are looking for a 25% wage increase while the company is offering 5%
- Xstrata dumped its bid for Anglo-American which I would take to mean that something else better is on the table. Something in platinum (Lonmin rearing its head again?). If the platinum sector goes through another round of assets shuffles then this catches the imagination of traders and investors who start looking at the sector for opportunities.
- From the newsflow I get the sense that IMP seems to be coming into favour - and off a relatively undemanding base, it could be one to watch.
Wednesday, October 14, 2009
Dow 10000 is here
Well the Dow Jones index has finally breached the 10000 point level once again and the psychological kicker that has come through is evident in Asian trading this morning. The Nikkei is up over 2% and people in general are feeling good about themselves.
Its just a damn pity that the US Dollar keeps seeing its ass and falling through the floor! It is acting as a serious handbrake to my long Sasol trade. Interestingly the SOLSBG warrant has continued to track up even if the Sasol share price has been moving sideways.
I had been gradually building up a long in platinum and have added to that position yesterday as the price has firmed above $1355. I suspect positive sentiment will be with the markets and industrial metals this week - trend is your friend and all of that.
On the small cap front
Did anybody see that new power board put in place at African Dawn?!
Christo Weise and Robert Emslie as non-execs. This surely has to be worth a punt if these guys are throwing their weight behind it.
Director dealings
It is interesting to see that directors are starting to sell into this market - is it the guys cashing for an early Christmas?!
Just yesterday:
Its just a damn pity that the US Dollar keeps seeing its ass and falling through the floor! It is acting as a serious handbrake to my long Sasol trade. Interestingly the SOLSBG warrant has continued to track up even if the Sasol share price has been moving sideways.
I had been gradually building up a long in platinum and have added to that position yesterday as the price has firmed above $1355. I suspect positive sentiment will be with the markets and industrial metals this week - trend is your friend and all of that.
On the small cap front
Did anybody see that new power board put in place at African Dawn?!
Christo Weise and Robert Emslie as non-execs. This surely has to be worth a punt if these guys are throwing their weight behind it.
Director dealings
It is interesting to see that directors are starting to sell into this market - is it the guys cashing for an early Christmas?!
Just yesterday:
- Topping over at Steinhoff sold R11m worth of shares
- Mokoena at Eqstra sold R240k
- Lazarus at Blue Label sold R309k
- Curle at Altech cashed in some of his options and sold R1.38m worth of shares
- Matlakala at Metropolitan sold out R2.5m
- Van Deventer at Shoprite settled options and cashed out R7.9m
Monday, October 12, 2009
Monday - quick note
Hello boys and girls
A busy day on Monday but one which ultimately went nowhere fast.
The primary reason for my angst was that Sasol went ex-dividend today which lopped R6 off its price - money which was quickly recovered as markets continued to rally.
Sasol eventually finished the day off 80c at R288 with the SOLSBG warrant ticking up 2c to finish at 31c.
Goldman Sachs today set a revised (downward) price target on the oil firm with a 12-month target of R403... still a handy premium to where it is now!
Gold carried on trucking up nicely and I have some small long positions open on platinum as well. If there are legs to this economic recovery then an industrial precious metal like platinum could benefit at present levels.
Anyway tomorrow is another day - happy trading!
A busy day on Monday but one which ultimately went nowhere fast.
The primary reason for my angst was that Sasol went ex-dividend today which lopped R6 off its price - money which was quickly recovered as markets continued to rally.
Sasol eventually finished the day off 80c at R288 with the SOLSBG warrant ticking up 2c to finish at 31c.
Goldman Sachs today set a revised (downward) price target on the oil firm with a 12-month target of R403... still a handy premium to where it is now!
Gold carried on trucking up nicely and I have some small long positions open on platinum as well. If there are legs to this economic recovery then an industrial precious metal like platinum could benefit at present levels.
Anyway tomorrow is another day - happy trading!
Sunday, October 11, 2009
Bits and bobs
Tough week - just when you think you have things figured out you get worked over....
Before I get into my post this week I have to post something from Paul Theron over at South African asset management firm Vestact which I thought rang so true:
Deadly financial plan
FINANCIAL planning is deadly boring. What is worse, most of the assumptions are wild guesses, like the rate of inflation, your date of death and returns on equities.
Blogger Carl Richards suggests that it might be better to forget all the thumb sucking and just focus on some of the things we can control, and then hope for the best.
So how’s this for a financial plan. (1) Save as much as you reasonably can; (2) Don’t lose money through risky or stupid investments; (3) Draw down no more than 4%-6% of your assets each year once you retire.
There you go, all sorted.
...... And here we monkeys are trying to time or beat the market with our "systems" and analysis!
Sometimes I think keeping it all nice and simple beats this whole trading lark ... and then I get it right and I feel like a genius for a couple of hours!
Things that occur to me:
I do remain bearish on some aspects of the global economy but there is some genuinely positive data coming through:
Before I get into my post this week I have to post something from Paul Theron over at South African asset management firm Vestact which I thought rang so true:
Deadly financial plan
FINANCIAL planning is deadly boring. What is worse, most of the assumptions are wild guesses, like the rate of inflation, your date of death and returns on equities.
Blogger Carl Richards suggests that it might be better to forget all the thumb sucking and just focus on some of the things we can control, and then hope for the best.
So how’s this for a financial plan. (1) Save as much as you reasonably can; (2) Don’t lose money through risky or stupid investments; (3) Draw down no more than 4%-6% of your assets each year once you retire.
There you go, all sorted.
...... And here we monkeys are trying to time or beat the market with our "systems" and analysis!
Sometimes I think keeping it all nice and simple beats this whole trading lark ... and then I get it right and I feel like a genius for a couple of hours!
Things that occur to me:
I do remain bearish on some aspects of the global economy but there is some genuinely positive data coming through:
- Sometimes we traders get nailed by short-term "noise" that we don't look at what is right in front of us. I took a look at these charts which plotted the Baltic Dry Index (BDI) against Gold, Oil etc etc and it makes for interesting reading - underlying shipping rates are on the up (solidly)
- These string of natural disasters intrigue me and I am surprised they have been given so little coverage by the financial media. There is likely to be a lot of government sponsored re-building which will need to take place here in the coming months. Would be interesting to know how this will impact supply and demand of commodities
- I still think there is tension with Iran and I don't see the oil price going South any time soon except perhaps against a rebound in the dollar (see below)
- While I have been shouted down on it by certain people - I still believe that Pakistan is a far bigger economic and security threat to the world than people are giving it credit for. For crying in a bucket they stormed a millitary base and held soldiers captive in one of the countries which has active nuclear armaments!
- I see Jim Rogers is calling Gold to $2300 over the next decade and oild somewhere between $150 - $200 as well but sounds like a lot of noise and very unspecific.
- I am still long Sasol (probably short-term target of R310). The Rand to Dollar exchange rate has played havoc with this trade but it seems to have ground itself higher, despite the currency. Still think there is a bit more legs to this trade
- I get the sense that we might be about to see the dollar do a short-term bounce (which might tie give a boost to SOL). Yes it has been sold down hard but at some stage but when something is completely out of favour, it suddenly surprises. It is also still a "hard" currency and with many export dependant economies needing a strong dollar exchange rate, it might not be a bad idea to look at the USD recovering in the short-term
- I have put on some SMALL and TENTATIVE shorts on Gold as well on the back of a dollar revival
- The 10000 point Dow must be on the cards for this week
Thursday, October 1, 2009
Heartening stuff
I hear somebody threw a shoe at the head of the IMF at some presentation yesterday. Heartening stuff to see that people are venting their fury on bankers.
Friday mumbles
After making a small profit on my short on the Top40 I closed out my position and the only open trade I now have open is a long on Sasol. At least the Rand is providing a bit of a handbrake at the moment and the oil price at $68.60 is "robust"
There is no question that the rising unemployment issues in places like the US remains a threat - you cannot have a jobless recovery - finished and klaar. Personally I think a lot of stocks will still come off over the next few months - particularly those with exposure to the consumer end of the market.
A couple of people commented that being long Sasol while shorting the TOp40 was surely counter-productive and in general that makes sense. But Sasol is cheap in comparison to its international peers.
At the moment Sasol is trading on a price to earnings (PE) multiple of say 10.5 (allowing for some currency).
In comparison the historical PE's of:
For sure Sasol is not Exxon or Chevron but when one considers the multiplier effect that a weaker rand could have on earnings and the great technology the company possesses, it would make sense to see Sasol pushing on from here.
But that's just my view so who knows.
It is not a very scientific method of analysing investor sentiment but I thought what was quite interesting was to take a look at the top headlines on CNN....
# Chicago, Rio lead race to host Olympics
# Key piece of human evolution revealed
# 1,100 dead in Indonesia quakes, U.N. says
# Ex-prosecutor says he lied about Polanski case
# Martin: Hollywood is clueless on Polanski
# CNNMoney: Dow plunges on economic reports
# Fortune: BofA CEO scores $53M retirement
# KSL: Elizabeth Smart says she was raped daily
# Vote now for 2009 CNN Hero of the Year
# Time: What Berlusconi's Obama jokes say
# Ticker: Republican sounds off on Polanski
# Boy, 11, wages fight against the N-word Video
# Stranger carries boy from burning building Video
# H1N1 vaccine on schedule, official says
# What if you ditched your car for a day?
# Kanye West's 'Fame Kills' tour meets swift end
# Sister upset about Mackenzie Phillips' book Video
# Poo power saves farmer $200,000 Video T-shirt
# CNN Wire: Jon Gosselin’s epiphany...
...... Yip sounds like people are REALLY worried about panic in the global economy this Friday.
There is no question that the rising unemployment issues in places like the US remains a threat - you cannot have a jobless recovery - finished and klaar. Personally I think a lot of stocks will still come off over the next few months - particularly those with exposure to the consumer end of the market.
A couple of people commented that being long Sasol while shorting the TOp40 was surely counter-productive and in general that makes sense. But Sasol is cheap in comparison to its international peers.
At the moment Sasol is trading on a price to earnings (PE) multiple of say 10.5 (allowing for some currency).
In comparison the historical PE's of:
- Exxon Mobil - 17 times
- Chevron - 15 times
- Royal Dutch Shell - 13 times
- BP - 13.9
- ConocoPhillips - 13
- Total - 9
For sure Sasol is not Exxon or Chevron but when one considers the multiplier effect that a weaker rand could have on earnings and the great technology the company possesses, it would make sense to see Sasol pushing on from here.
But that's just my view so who knows.
It is not a very scientific method of analysing investor sentiment but I thought what was quite interesting was to take a look at the top headlines on CNN....
# Chicago, Rio lead race to host Olympics
# Key piece of human evolution revealed
# 1,100 dead in Indonesia quakes, U.N. says
# Ex-prosecutor says he lied about Polanski case
# Martin: Hollywood is clueless on Polanski
# CNNMoney: Dow plunges on economic reports
# Fortune: BofA CEO scores $53M retirement
# KSL: Elizabeth Smart says she was raped daily
# Vote now for 2009 CNN Hero of the Year
# Time: What Berlusconi's Obama jokes say
# Ticker: Republican sounds off on Polanski
# Boy, 11, wages fight against the N-word Video
# Stranger carries boy from burning building Video
# H1N1 vaccine on schedule, official says
# What if you ditched your car for a day?
# Kanye West's 'Fame Kills' tour meets swift end
# Sister upset about Mackenzie Phillips' book Video
# Poo power saves farmer $200,000 Video T-shirt
# CNN Wire: Jon Gosselin’s epiphany...
...... Yip sounds like people are REALLY worried about panic in the global economy this Friday.
Saturday, September 26, 2009
Still looking grim
I am not one of those perma-bears in the Marc Faber mould, but I have been short for the last few weeks (often at some cost to myself).... I'm sure I keep forgetting the mantra - THE TREND IS YOUR FRIEND!!!!!!!
In fact I am actually a believer that the worst is behind us, but the structural problems and the volatility still need to be dealt with and markets have simply run too far too fast.
Anyway, finally into a decent short position on the JSE Top 40 (J200) which looks like it still has some legs.
Reasons that I reckon you can stay short:
- Two bombs in Pakistan this weekend are likely to keep the whole area alert for more tension
- More US troop losses in Afghanistan - the US is caught between a rock and a hard place between Iraq, Iran and having to commit resources to Afghanistan which is becoming a real problem
- On the ALSI on Friday there was a decent downward move and with resources still under the whip, there could be more downside to come - ask yourself why stocks should move up now?
Faber
Speaking of Faber he was interviewed by Bloomberg recently and this is what he had to say:
“You cannot postpone the hour of truth forever,” adding “The next stage is for total breakdown of the financial system and for an economic and financial crisis that will bankrupt governments.”
Strategy wise he continued to beat the drum of buying Asian stocks and gold while selling down the US Dollar and the Pound - I can agree on the pound, I'm less sure on the dollar although I think in time it will be replaced as the global fiat currency.
Playing into this strategy I am still a buyer of the DBXJP and DBXWD exchange traded funds (ETF) and considering using the spreads account to short the pound... the question is what do you short it against? The Euro...? Not so sure.
The Privateer
There is an excellent piece in the latest copy of The Privateer talking about protectionism, trade tariffs, Obama and the Chinese.
Summing it up are these two paragraphs - sound familiar?:
Any student of the depression of the 1930s will be familiar with the “beggar thy neighbour” policies which did as much if not more than any other piece of economic insanity in turning a stock market crash into a decade-long global depression. The infamous “Smoot-Hawley” tariff act was signed into law by President Hoover on June 17, 1930. It did notbring US tariffs into being, what it did was to lift tariffs on 20,000 imported items to record levels to “protect” American business.
Eight months before the act was signed in October 1929, US and world stock markets had crashed. Six weeks before the act was signed, US stock markets had reached what proved to be the top of their post-crash rally. Within weeks of the passage of the Smoot-Hawley act, trade barriers in the form of tariffs and quotas went up across the world.
In fact I am actually a believer that the worst is behind us, but the structural problems and the volatility still need to be dealt with and markets have simply run too far too fast.
Anyway, finally into a decent short position on the JSE Top 40 (J200) which looks like it still has some legs.
Reasons that I reckon you can stay short:
- Two bombs in Pakistan this weekend are likely to keep the whole area alert for more tension
- More US troop losses in Afghanistan - the US is caught between a rock and a hard place between Iraq, Iran and having to commit resources to Afghanistan which is becoming a real problem
- On the ALSI on Friday there was a decent downward move and with resources still under the whip, there could be more downside to come - ask yourself why stocks should move up now?
Faber
Speaking of Faber he was interviewed by Bloomberg recently and this is what he had to say:
“You cannot postpone the hour of truth forever,” adding “The next stage is for total breakdown of the financial system and for an economic and financial crisis that will bankrupt governments.”
Strategy wise he continued to beat the drum of buying Asian stocks and gold while selling down the US Dollar and the Pound - I can agree on the pound, I'm less sure on the dollar although I think in time it will be replaced as the global fiat currency.
Playing into this strategy I am still a buyer of the DBXJP and DBXWD exchange traded funds (ETF) and considering using the spreads account to short the pound... the question is what do you short it against? The Euro...? Not so sure.
The Privateer
There is an excellent piece in the latest copy of The Privateer talking about protectionism, trade tariffs, Obama and the Chinese.
Summing it up are these two paragraphs - sound familiar?:
Any student of the depression of the 1930s will be familiar with the “beggar thy neighbour” policies which did as much if not more than any other piece of economic insanity in turning a stock market crash into a decade-long global depression. The infamous “Smoot-Hawley” tariff act was signed into law by President Hoover on June 17, 1930. It did notbring US tariffs into being, what it did was to lift tariffs on 20,000 imported items to record levels to “protect” American business.
Eight months before the act was signed in October 1929, US and world stock markets had crashed. Six weeks before the act was signed, US stock markets had reached what proved to be the top of their post-crash rally. Within weeks of the passage of the Smoot-Hawley act, trade barriers in the form of tariffs and quotas went up across the world.
Monday, September 21, 2009
Short and damn proud of it
I won't lie, I have been seeing my ass trying to short this market.
Having said that it looks like I am in a short on the JSE Top40 (J200) which might have some legs.
I bailed on my AngloGold long position this morning as my stop of R320 was broken and so far it looks like the right decision with ANG looking to re-test the R300 mark.
I'm reading an excellent piece in The Privateer, which I'll post a piece from once I've absorbed it all but maybe if I can throw out some motivation for being short on the Top40 in the short-term.
A) Since the third of March 2009, J200 has rallied from 16400 to 23350 - the rate of appreciation was unsustainable
B) The South African Rand has strengthened heavily in the last few weeks as the US Dollar has weakened. If the appreciation is sustained or continues further then invariably you are going to have some earnings downgrades on the resource counters as the brokers adjust their forecasts.
C) The biggest short-term driver - there is a mountain of paper about to be issued by the likes of RBS in the coming weeks. There has to be questions asked about whether or not the market can adjust for this influx
D) The signs of economic powerhouses adopting protectionist policies are on the up and the decision by Obama to up the tariffs on the tyres imported from China is setting the wrong tone. Unemployment is rising, money in pocket decreasing ... and now you want the consumers to fork out higher prices for the imported goods? Protectionist policies will hurt export based economies hard.
E) Hows this for an interesting stat - for the month of August 2009 there are US$31 of insider stock sales for every US$1 of buys - can you say NO CONFIDENCE?
I am certainly not one of those Uber-Bears predicting the end of the world as we know it, but from every vantage point it would appear things have run too far, too fast. There might be a bit of window-dressing at the end of the September quarter but the enthusiasm to make a real assault on the Dow 10000 mark doesn't seem to be there.
We live in interesting times!
Having said that it looks like I am in a short on the JSE Top40 (J200) which might have some legs.
I bailed on my AngloGold long position this morning as my stop of R320 was broken and so far it looks like the right decision with ANG looking to re-test the R300 mark.
I'm reading an excellent piece in The Privateer, which I'll post a piece from once I've absorbed it all but maybe if I can throw out some motivation for being short on the Top40 in the short-term.
A) Since the third of March 2009, J200 has rallied from 16400 to 23350 - the rate of appreciation was unsustainable
B) The South African Rand has strengthened heavily in the last few weeks as the US Dollar has weakened. If the appreciation is sustained or continues further then invariably you are going to have some earnings downgrades on the resource counters as the brokers adjust their forecasts.
C) The biggest short-term driver - there is a mountain of paper about to be issued by the likes of RBS in the coming weeks. There has to be questions asked about whether or not the market can adjust for this influx
D) The signs of economic powerhouses adopting protectionist policies are on the up and the decision by Obama to up the tariffs on the tyres imported from China is setting the wrong tone. Unemployment is rising, money in pocket decreasing ... and now you want the consumers to fork out higher prices for the imported goods? Protectionist policies will hurt export based economies hard.
E) Hows this for an interesting stat - for the month of August 2009 there are US$31 of insider stock sales for every US$1 of buys - can you say NO CONFIDENCE?
I am certainly not one of those Uber-Bears predicting the end of the world as we know it, but from every vantage point it would appear things have run too far, too fast. There might be a bit of window-dressing at the end of the September quarter but the enthusiasm to make a real assault on the Dow 10000 mark doesn't seem to be there.
We live in interesting times!
Thursday, September 17, 2009
Shorts, warrants and something in between
Do you ever get the sense that you're at the end of a grand ponzi scheme and suddenly you are the last guy holding out waiting for your money to come in?
I'm starting to get that creepy feeling and I started looking around for a bit of downside protection today. Started shifting away from a lot of my small-cap stocks into either cash or puts today.
Without question my "feelings" are very non-technical and would be thrown out the door by most traders - but having watched the market in the last few days (specifically the US), one can't help but get the sense that the market is running out of steam.
Thought this made for interesting reading - this is the volume traded on Put warrant TOPSBV which is a warrant issued by Standard Bank on the Top40.
Monday - 14 September - 13.5m warrants traded
Tuesday - 15 September - 1.3m warrants traded
Wednesday - 16 September - 6.4m warrants traded
Thursday - 17 September - 7.7m warrants traded
There is a lot of action around this warrant and I get the sense that people are starting to buy some protection against downside risk.
Looking at the US markets this evening I see that they seem to be bumping their heads around 9800 level on the Dow and people have stopped to ask themselves - what next?
I still have a long position on Anglo Gold which seems to be doing ok although I am watching it quite closely. If it doesn't kick on again tomorrow I might be tempted to exit it although I wouldn't be surprised to see gold move up going into the weekend. Looking at the ADR (AU:US) its off just under 2% but the JSE listed counter has not been helped by the dollar being so weak - a little slip in the rand and the gold shares could fly.
Warrants / spreads / products etc
An observation that I thought could be the opening for an interesting debate around linear and de-linear trading products in a market such as these.
I haven't traded warrants in ages, preferring to instead use things like the spread trading platforms offered by our favourite bucketshop. However I was finding myself getting stopped out at losses on that particular platform with some regularity even if the overall trend I was looking at was right.
While there has been this big move toward straight line products like spreads, knock-outs and binary options there is still an important place for a product such as warrants which can absorb some sideways volatilty (without hopefully being strangled by time decay).
The importance of picking the right product to work alongside your trade is often as important as picking the right trade - it means sweet bugger all if you can't execute on the right strategy.
I'm starting to get that creepy feeling and I started looking around for a bit of downside protection today. Started shifting away from a lot of my small-cap stocks into either cash or puts today.
Without question my "feelings" are very non-technical and would be thrown out the door by most traders - but having watched the market in the last few days (specifically the US), one can't help but get the sense that the market is running out of steam.
Thought this made for interesting reading - this is the volume traded on Put warrant TOPSBV which is a warrant issued by Standard Bank on the Top40.
Monday - 14 September - 13.5m warrants traded
Tuesday - 15 September - 1.3m warrants traded
Wednesday - 16 September - 6.4m warrants traded
Thursday - 17 September - 7.7m warrants traded
There is a lot of action around this warrant and I get the sense that people are starting to buy some protection against downside risk.
Looking at the US markets this evening I see that they seem to be bumping their heads around 9800 level on the Dow and people have stopped to ask themselves - what next?
I still have a long position on Anglo Gold which seems to be doing ok although I am watching it quite closely. If it doesn't kick on again tomorrow I might be tempted to exit it although I wouldn't be surprised to see gold move up going into the weekend. Looking at the ADR (AU:US) its off just under 2% but the JSE listed counter has not been helped by the dollar being so weak - a little slip in the rand and the gold shares could fly.
Warrants / spreads / products etc
An observation that I thought could be the opening for an interesting debate around linear and de-linear trading products in a market such as these.
I haven't traded warrants in ages, preferring to instead use things like the spread trading platforms offered by our favourite bucketshop. However I was finding myself getting stopped out at losses on that particular platform with some regularity even if the overall trend I was looking at was right.
While there has been this big move toward straight line products like spreads, knock-outs and binary options there is still an important place for a product such as warrants which can absorb some sideways volatilty (without hopefully being strangled by time decay).
The importance of picking the right product to work alongside your trade is often as important as picking the right trade - it means sweet bugger all if you can't execute on the right strategy.
Saturday, September 5, 2009
Any ideas?
Does anybody know of any offshore Exchange Traded Funds (ETFs) that you can buy through an online broker and pay for on your credit card?
As a South African our locally-listed ETF options are relatively limited. It would be nice to access other markets like Brazil and China.
At the moment locally I have the following ETF's in my portfolio:
The Deutsche Bank X-Trackers - DBX Japan (DBXJP), DBX World MSCI Index (DBXWD) and DBX MSCI US (DBXUS) as well as the New Gold ETF (GLD) and the local government bond offering from investec ZSHARES GOVI (ZGOVI).
Obviously it would be nice to expand the universe a bit and be able to find ETF's that give exposure to other regions as well.
Zecco.com
Has anyone locally had a look at this Zecco.com offering?
It looks quite interesting in terms of a low-cost investment and trading platform. Would be nice to be able to use a credit card to transfer funds into an account though.
Thoughts on which online brokers allow you to transfer funds via your credit card?
As a South African our locally-listed ETF options are relatively limited. It would be nice to access other markets like Brazil and China.
At the moment locally I have the following ETF's in my portfolio:
The Deutsche Bank X-Trackers - DBX Japan (DBXJP), DBX World MSCI Index (DBXWD) and DBX MSCI US (DBXUS) as well as the New Gold ETF (GLD) and the local government bond offering from investec ZSHARES GOVI (ZGOVI).
Obviously it would be nice to expand the universe a bit and be able to find ETF's that give exposure to other regions as well.
Zecco.com
Has anyone locally had a look at this Zecco.com offering?
It looks quite interesting in terms of a low-cost investment and trading platform. Would be nice to be able to use a credit card to transfer funds into an account though.
Thoughts on which online brokers allow you to transfer funds via your credit card?
Saturday, August 29, 2009
Risk vs return
Out of sheer curiousity - if I asked you to put R500 down for a R50 return would you do it?
What if I could do it 8 out of 10 times?
I can't make those promises so I am not going to try but I think it is quite interesting exercise to conduct in terms of trader mentality.
Personally I get the sense that a lot of traders would far rather hit one or two spectacular trades but don't keep score of their smaller losses which add up very quickly.
A lot of people have all of these questions about trading vs gambling - my personal opinion - trading is about building wealth. You build wealth by having a score card which reads more wins than losses and you preserve the capital that you generate.
Gambling involves going out and partying it up when you win well and complaining when you lose.
What if I could do it 8 out of 10 times?
I can't make those promises so I am not going to try but I think it is quite interesting exercise to conduct in terms of trader mentality.
Personally I get the sense that a lot of traders would far rather hit one or two spectacular trades but don't keep score of their smaller losses which add up very quickly.
A lot of people have all of these questions about trading vs gambling - my personal opinion - trading is about building wealth. You build wealth by having a score card which reads more wins than losses and you preserve the capital that you generate.
Gambling involves going out and partying it up when you win well and complaining when you lose.
Saturday, August 22, 2009
I like this!
Courtesy of PSG Online - I like this as it gives some interesting insight into what it takes to be a good trader...
Winning traders execute and monitor their trades in a peak performance state. They are not worried about past mistakes or future profits. All their attention is focused resolutely on the ongoing trade. But it is hard to focus on your ongoing experience when you are worrying about losses, or some other trading problem. It may sound easy to take losses in stride, and avoid letting them interfere with your ongoing experience, but when you are in a severe drawdown, and worried about how you will get out of it, it is hard to avoid letting it get to you. You may become consumed with guilt and anxiety. It is natural. Your future may actually be at stake. But you cannot trade at your best when you are worried. Somehow you must train your mind to put the losses out of your awareness. One way to train your mind to temporarily forget about losses is to schedule worry time.
The natural human tendency to worry about problems protects us. If we did not worry, we might take dangerous risks, and pay a steep price. But worrying can be a problem for successful trading. If you are the kind of person who worries uncontrollably, it may interfere with your ability to pay attention to executing your trading plan. Not only can it distract you when you try to execute a trade, excessive worrying can prevent you from getting a restful sleep at night, or keep you so uptight that you cannot relax. Without proper rest and relaxation, you will find it difficult to mobilise your psychological resources for optimal trading performance.
Worrying becomes a problem when you do it too often and for no good reason. For example, if you have mounted losses and worry about it, you tend to think the same thoughts over and over again. It does not help much. You are likely to just let it interfere with your ability to make back the money you have lost. You need to put such thoughts out of your mind while you trade. When you worry too much, you feel out of control. One way to regain control is to schedule worry time. The basic idea is to set aside a certain part of the day, say seven o'clock, for example, and only worry for 30 minutes during that time. The goal is to worry only at a specific time for a fixed length of time. When you catch yourself worrying during the day, you can tell yourself to stop with the knowledge that you can worry about whatever is bothering you later. Knowing that you can worry during the "worry session" will help you control your worrying.
It may sound a little simplified, but it works for many people who have trouble controlling their worrying. Try it. See if it works. If you are like most people, you will find that you worry less, and can control it. So do not let worrying interfere with your ability to trade successfully. Worrying seems like a natural response to a setback, but it usually gets you nowhere. Rather than hopelessly worry, it is vital that you take an active problem solving approach. If you can control your worrying by scheduling regular worry sessions, you will be able to recover from a setback fast and return to profitability.
"In a crisis, don't hide behind anything or anybody. They're going to find you anyway." - Bear Bryant
Winning traders execute and monitor their trades in a peak performance state. They are not worried about past mistakes or future profits. All their attention is focused resolutely on the ongoing trade. But it is hard to focus on your ongoing experience when you are worrying about losses, or some other trading problem. It may sound easy to take losses in stride, and avoid letting them interfere with your ongoing experience, but when you are in a severe drawdown, and worried about how you will get out of it, it is hard to avoid letting it get to you. You may become consumed with guilt and anxiety. It is natural. Your future may actually be at stake. But you cannot trade at your best when you are worried. Somehow you must train your mind to put the losses out of your awareness. One way to train your mind to temporarily forget about losses is to schedule worry time.
The natural human tendency to worry about problems protects us. If we did not worry, we might take dangerous risks, and pay a steep price. But worrying can be a problem for successful trading. If you are the kind of person who worries uncontrollably, it may interfere with your ability to pay attention to executing your trading plan. Not only can it distract you when you try to execute a trade, excessive worrying can prevent you from getting a restful sleep at night, or keep you so uptight that you cannot relax. Without proper rest and relaxation, you will find it difficult to mobilise your psychological resources for optimal trading performance.
Worrying becomes a problem when you do it too often and for no good reason. For example, if you have mounted losses and worry about it, you tend to think the same thoughts over and over again. It does not help much. You are likely to just let it interfere with your ability to make back the money you have lost. You need to put such thoughts out of your mind while you trade. When you worry too much, you feel out of control. One way to regain control is to schedule worry time. The basic idea is to set aside a certain part of the day, say seven o'clock, for example, and only worry for 30 minutes during that time. The goal is to worry only at a specific time for a fixed length of time. When you catch yourself worrying during the day, you can tell yourself to stop with the knowledge that you can worry about whatever is bothering you later. Knowing that you can worry during the "worry session" will help you control your worrying.
It may sound a little simplified, but it works for many people who have trouble controlling their worrying. Try it. See if it works. If you are like most people, you will find that you worry less, and can control it. So do not let worrying interfere with your ability to trade successfully. Worrying seems like a natural response to a setback, but it usually gets you nowhere. Rather than hopelessly worry, it is vital that you take an active problem solving approach. If you can control your worrying by scheduling regular worry sessions, you will be able to recover from a setback fast and return to profitability.
"In a crisis, don't hide behind anything or anybody. They're going to find you anyway." - Bear Bryant
Sunday, August 9, 2009
Interesting market to be in
It is a tough market to be in at the moment. Every sense is screaming that equity prices are looking increasingly expensive but the market seems to be disagreeing and there is more green in Asia today after increasingly "bullish" economic data out of the US on the jobs front.... I have no comment on this data beyond saying that you cannot have an economic recovery while the number of unemployed continue to rise.
In terms of open trading positions I have a long on Gold from US$955 and Platinum from US$1250. Also taken a bit of a dirty little punt on sugar having read that there is a global shortage which is likely to fuel prices in the coming months.
The sugar one I can't comment on - it really was just a flutter and having looked around the reality of of sugar supply-side shortfall seems to be credible.
Platinum I think will see some increased demand going into the second half of 2009 with some re-stocking in the auto sector (the so called "cash-for-clunkers" programme) and maybe some jewellery demand as the economy stabilises. My guess is we could see platinum testing $1285 again this week.
Gold - The yellow metal has worked hard to get back above the $950 an ounce mark. There have been a couple of stomach curdling $10 - $15 drops on action in the dollar market - which have hurt me on stop losses a couple of times - but the metal seems to be behaving a little better after the sell-off last week. I think we could realistically see gold test $980 this week and I would be tempted to take some part profits at $975 if it gets a bit of wind under its sails.
On the equity front I've continued the habit of accumulating a mixture of ALSI constituents and the exchange traded funds (ETFs) that have been mentioned on this blog before.
In terms of open trading positions I have a long on Gold from US$955 and Platinum from US$1250. Also taken a bit of a dirty little punt on sugar having read that there is a global shortage which is likely to fuel prices in the coming months.
The sugar one I can't comment on - it really was just a flutter and having looked around the reality of of sugar supply-side shortfall seems to be credible.
Platinum I think will see some increased demand going into the second half of 2009 with some re-stocking in the auto sector (the so called "cash-for-clunkers" programme) and maybe some jewellery demand as the economy stabilises. My guess is we could see platinum testing $1285 again this week.
Gold - The yellow metal has worked hard to get back above the $950 an ounce mark. There have been a couple of stomach curdling $10 - $15 drops on action in the dollar market - which have hurt me on stop losses a couple of times - but the metal seems to be behaving a little better after the sell-off last week. I think we could realistically see gold test $980 this week and I would be tempted to take some part profits at $975 if it gets a bit of wind under its sails.
On the equity front I've continued the habit of accumulating a mixture of ALSI constituents and the exchange traded funds (ETFs) that have been mentioned on this blog before.
Saturday, July 25, 2009
Saturday mumblings
I haven't posted in a while but I've got a couple of observations around trading, wealth management and strategy that have occurred to me which I thought I would stick up here on the blog and see if others had some thoughts.
Trade vs. buy-and-hold
I know many traders turn up their noses at old fashioned buy and hold strategies (not "hold and hope" stuff - quality buy and hold). I was looking at the performance of my two respective portfolios since September 2008 and interestingly my buy and hold (wealth) portfolio has outperformed my day-trading portfolio.
I found that quite interesting considering the volatility in the market at the moment.
Does it mean I am a kak trader? The record says I've made consistent money day-trading so I'd like to think I have some skills but I think it does show that a consistent system aimed at wealth and money management will trump short term trading gains.
Trading personality
Have you ever done a personality test? Do you think there is room for one in your trading strategy?
A mate of mine took this What's Stopping You test run by Global Trader and it came out with some interesting results.
The evaluation basically tests some of your knowledge about financial products and your risk profile which is all good and well. Most interestingly for me - the test looked at his personality and it discovered something of an impulsive streak in him. It's something I agree with and something I've also seen in my own trading. Sometimes you find yourself constantly looking for positions to trade or you find yourself picking out a quick and easy "punt".
In his case, I have regularly seen him drop money when it wasn't necessary to take a position and the test actually highlighted for him a problem with his trading personality. If he wants to punt, he can do it on the horses.
Point being that he was made to think about what he was doing and hopefully it improves his trading strategy.
Nothing wrong with asking an expert
I think there are quite a few traders who want to "do it their way".
By following advice from other traders they feel like they are cheating a bit. I haven't traded much recently and when I have it has been very haphazardly and not been good for the wallet.
I stepped back and took one of the recommended "house" views from one of my service providers and BOOM I was back on the scoreboard within 6 hours.
Sometimes you don't have to go against the grain to pick good positions.
Just some thoughts - use 'em don't use 'em....
Trade vs. buy-and-hold
I know many traders turn up their noses at old fashioned buy and hold strategies (not "hold and hope" stuff - quality buy and hold). I was looking at the performance of my two respective portfolios since September 2008 and interestingly my buy and hold (wealth) portfolio has outperformed my day-trading portfolio.
I found that quite interesting considering the volatility in the market at the moment.
Does it mean I am a kak trader? The record says I've made consistent money day-trading so I'd like to think I have some skills but I think it does show that a consistent system aimed at wealth and money management will trump short term trading gains.
Trading personality
Have you ever done a personality test? Do you think there is room for one in your trading strategy?
A mate of mine took this What's Stopping You test run by Global Trader and it came out with some interesting results.
The evaluation basically tests some of your knowledge about financial products and your risk profile which is all good and well. Most interestingly for me - the test looked at his personality and it discovered something of an impulsive streak in him. It's something I agree with and something I've also seen in my own trading. Sometimes you find yourself constantly looking for positions to trade or you find yourself picking out a quick and easy "punt".
In his case, I have regularly seen him drop money when it wasn't necessary to take a position and the test actually highlighted for him a problem with his trading personality. If he wants to punt, he can do it on the horses.
Point being that he was made to think about what he was doing and hopefully it improves his trading strategy.
Nothing wrong with asking an expert
I think there are quite a few traders who want to "do it their way".
By following advice from other traders they feel like they are cheating a bit. I haven't traded much recently and when I have it has been very haphazardly and not been good for the wallet.
I stepped back and took one of the recommended "house" views from one of my service providers and BOOM I was back on the scoreboard within 6 hours.
Sometimes you don't have to go against the grain to pick good positions.
Just some thoughts - use 'em don't use 'em....
Friday, June 26, 2009
Trading thought
Day-trading can be a lonely past-time - which is why I suspect traders love to flit between various internet message boards.
But the problem with that is that bad habits can creep into your trading if you don't have somebody watching over you or making sure you stick to your system.
I can see it in my own trading - I've been losing discipline and been chasing around silly little punts that have cost me a few bucks in the last few days.
I found myself scalping for silly little profits and then tossing them away on speculative positions a few minutes later. Yesterday I did no fewer than 30 trades and went backwards!!!
30 trades is ridiculous and the stupid part of it was that if I had let my first trade run it would have been more profitable than all my other winning trades on the day put together.
Time to step back and get out of the scalping game and get back to fewer but more profitable trades...
... live and learn.
But the problem with that is that bad habits can creep into your trading if you don't have somebody watching over you or making sure you stick to your system.
I can see it in my own trading - I've been losing discipline and been chasing around silly little punts that have cost me a few bucks in the last few days.
I found myself scalping for silly little profits and then tossing them away on speculative positions a few minutes later. Yesterday I did no fewer than 30 trades and went backwards!!!
30 trades is ridiculous and the stupid part of it was that if I had let my first trade run it would have been more profitable than all my other winning trades on the day put together.
Time to step back and get out of the scalping game and get back to fewer but more profitable trades...
... live and learn.
Monday, June 22, 2009
But but but....
A sea of red greets traders today with Asia kicking us off. Had a couple of overnight shorts in place on both the Hang Seng and Nikkei which I've cashed out... Still reckon there is more downside to this leg but nobody ever went broke taking a profit.
The only thing I've got open now is a short on the Dow with a downward trend back in place as the rally fizzles out after the World Bank came out yesterday with some negative comments about future growth potential... which was in contrast to comments attributed to George Soros who said "The worst was behind us"
I am by no means a perma-bear and I think there are some nice value opportunities in the market at the moment - particularly in the South African market - but we need to appreciate how skittish investors are.
The bid by Xstrata for Anglo American gave the local market a bit of a boost but having chatted to a few people I get the sense that the bid is not going to get the support needed and if the "transaction premium" gets yanked out from Anglo then the JSE Top40 could take a smack.
Commodity futures are down as well. I thought there might be a bit more support for gold at 920 and oil at US$68 (particularly after its recent strength) but I guess next areas of interest for me are gold at around US$910 and oil at US$65.
(On that - I noticed an interesting story on Bloomberg about Japanese banks threatening to pull some funding from Venezuelan oil assets in response to non-payment and nationalisation threats... could this be a short term catalyst?)
Down still seems to be the only direction.
The only thing I've got open now is a short on the Dow with a downward trend back in place as the rally fizzles out after the World Bank came out yesterday with some negative comments about future growth potential... which was in contrast to comments attributed to George Soros who said "The worst was behind us"
I am by no means a perma-bear and I think there are some nice value opportunities in the market at the moment - particularly in the South African market - but we need to appreciate how skittish investors are.
The bid by Xstrata for Anglo American gave the local market a bit of a boost but having chatted to a few people I get the sense that the bid is not going to get the support needed and if the "transaction premium" gets yanked out from Anglo then the JSE Top40 could take a smack.
Commodity futures are down as well. I thought there might be a bit more support for gold at 920 and oil at US$68 (particularly after its recent strength) but I guess next areas of interest for me are gold at around US$910 and oil at US$65.
(On that - I noticed an interesting story on Bloomberg about Japanese banks threatening to pull some funding from Venezuelan oil assets in response to non-payment and nationalisation threats... could this be a short term catalyst?)
Down still seems to be the only direction.
Saturday, June 20, 2009
Some fundamental calls
There are no shortage of opportunities to scalp around the commodities but finding deep value investments are a little tougher given the economic outlook.
Markets may have rallied and there may have been some stimulus in the system prompting some improved data but I get the sense we're starting a second downward leg.
Previously on this blog I've mentioned that I like the agriculture and food sectors as good bets over the next year or so. I've had my holdings in Zeder (plus followed the rights issue) and added to my shares in Country Bird Holdings (CBH) on the back of the directors dealings.
Another sector I hadn't given much consideration to was education in South Africa. Specifically private sector education.
Your main listed entry point for education at the moment is via Advtech which owns the Crawford schools. The share has run hard but they have an important area that AdvTech has is scale... You need scale and infrastructure to make a success of education for obvious reasons.
The second unknown entry point which I had only heard about quite recently was through Paladin Capital (a soon to be listed subsidiary of the PSG group). They've apparently got a fairly sizeable investment in a new education player which might be of interest....
** Author holds shares in ZED, CBH, PSG
Markets may have rallied and there may have been some stimulus in the system prompting some improved data but I get the sense we're starting a second downward leg.
Previously on this blog I've mentioned that I like the agriculture and food sectors as good bets over the next year or so. I've had my holdings in Zeder (plus followed the rights issue) and added to my shares in Country Bird Holdings (CBH) on the back of the directors dealings.
Another sector I hadn't given much consideration to was education in South Africa. Specifically private sector education.
Your main listed entry point for education at the moment is via Advtech which owns the Crawford schools. The share has run hard but they have an important area that AdvTech has is scale... You need scale and infrastructure to make a success of education for obvious reasons.
The second unknown entry point which I had only heard about quite recently was through Paladin Capital (a soon to be listed subsidiary of the PSG group). They've apparently got a fairly sizeable investment in a new education player which might be of interest....
** Author holds shares in ZED, CBH, PSG
Tuesday, June 16, 2009
Buy and hold vs day trading
I see there is quite a lot of "industry experts" coming out and saying how 'buy-and-hold' strategies will never work again and day-trading is suddenly where all the wealth is.
There are a lot of people who got toasted in 2008 while watching day-traders make hay while markets were tumbling. The logical answer is that 'buy and hold' no longer works and day-trading must be the way to go....
1. Most people are not cut out to be day-traders. The risk involved and the control involved to manage your own money makes it a highly stressful environment particularly if you are moving in and out of positions regularly.
2. Not all buy-and-hold investments have been poor. Despite this massive financial crisis, the JSE for instance has largely regained everything it lost over October and November 2008 and the dividends, while reduced, are still largely being paid.
3. Making money and keeping money are two completely different concepts that day-traders don't always focus on. Most day-traders will always tell you how they are making money and coining it in the market but if you had to actually drill down into their results you might find that the statistics tell another story. As I have said before on this blog - the question has to be what do you do once you've actually made a profit ....? Do you just gamble it away on the next trade always upping the risk or money down?
For me the strategy has always been to split the profits up and drop some of them into my bigger equity portfolio which largely does have a "buy-and-hold" theme based mentality. Once it is there I'm not likely to dip into it and I pick up the dividends which are subsequently reinvested.
Some of the other profit goes into expanding some of other business interest so that hopefully by the time retirement rolls around I have multiple sources of income with the outperformance being initially driven by the day-trading.
Conclusion
I read a statistic the other day that South Africa has a negative real savings rate. I knew it was bad but didn't realise it was THAT bad...
I don't think the issue should be about whether it is buy-and-hold vs. day trading but rather building up a strategy that lets you build long term wealth with the profits you can generate from day-trading....
Anyway just a thought - use it don't use it
There are a lot of people who got toasted in 2008 while watching day-traders make hay while markets were tumbling. The logical answer is that 'buy and hold' no longer works and day-trading must be the way to go....
1. Most people are not cut out to be day-traders. The risk involved and the control involved to manage your own money makes it a highly stressful environment particularly if you are moving in and out of positions regularly.
2. Not all buy-and-hold investments have been poor. Despite this massive financial crisis, the JSE for instance has largely regained everything it lost over October and November 2008 and the dividends, while reduced, are still largely being paid.
3. Making money and keeping money are two completely different concepts that day-traders don't always focus on. Most day-traders will always tell you how they are making money and coining it in the market but if you had to actually drill down into their results you might find that the statistics tell another story. As I have said before on this blog - the question has to be what do you do once you've actually made a profit ....? Do you just gamble it away on the next trade always upping the risk or money down?
For me the strategy has always been to split the profits up and drop some of them into my bigger equity portfolio which largely does have a "buy-and-hold" theme based mentality. Once it is there I'm not likely to dip into it and I pick up the dividends which are subsequently reinvested.
Some of the other profit goes into expanding some of other business interest so that hopefully by the time retirement rolls around I have multiple sources of income with the outperformance being initially driven by the day-trading.
Conclusion
I read a statistic the other day that South Africa has a negative real savings rate. I knew it was bad but didn't realise it was THAT bad...
I don't think the issue should be about whether it is buy-and-hold vs. day trading but rather building up a strategy that lets you build long term wealth with the profits you can generate from day-trading....
Anyway just a thought - use it don't use it
Risk summed up
Not sure where this is from, but I saw it posted on the Page 88 website and thought it summed up risk 100%
Thursday, June 11, 2009
US markets
The US markets are actually pure and simply kak at the moment.
Lot of confoculating (Howdy Page 88) around the 8700 and 940 levels on the Dow and S&P. It doesn't matter what data comes out the thing just hangs around at these levels.
Out of the mainstream equity markets but taken a small position long on the US 10 year Treasury. Other than that I am out of the market till this thing works itself out
Lot of confoculating (Howdy Page 88) around the 8700 and 940 levels on the Dow and S&P. It doesn't matter what data comes out the thing just hangs around at these levels.
Out of the mainstream equity markets but taken a small position long on the US 10 year Treasury. Other than that I am out of the market till this thing works itself out
Sunday, June 7, 2009
Crazy Friday
Geez how crazy was that Friday?? Enough to drive me to drink - not that I need an excuse of course.
The short platinum and copper trades took a while to get going but eventually they joined the tumble in metals prices and there was a bit of profit for Friday. The job numbers came in bad and NFP reflected the real problems the US is facing - you can massage what you like things aren't great...
The commodities and underlying equity markets took off like a bat outta hell and then suddenly started losing ground with Gold falling to US$955.
I entered a long pozzie on Gold just under US$960 anticipating something of a bounce as some "normality" returned to the market. Gold gyrated around a bit like a stripper at the Lollipop Lounge and just like the pros - promised a lot and delivered bugger all.
Personal feeling - commodities still look toppish and with the job numbers still showing no sign of a turnaround they seem to be looking like we could be about to start a second down-leg (particularly in the base metals and platinum). Gold and Oil still seem to be trading as something of a "risk" proxy.
There is some talk of the dollar starting to strengthen on the back of some prospects of rising interest rates in the US. The problem with interest rates going up is that its going to deaden any of these so called "green-shoots"...
No real conviction for direction tomorrow beyond expecting a bit of a rebound in gold.
The short platinum and copper trades took a while to get going but eventually they joined the tumble in metals prices and there was a bit of profit for Friday. The job numbers came in bad and NFP reflected the real problems the US is facing - you can massage what you like things aren't great...
The commodities and underlying equity markets took off like a bat outta hell and then suddenly started losing ground with Gold falling to US$955.
I entered a long pozzie on Gold just under US$960 anticipating something of a bounce as some "normality" returned to the market. Gold gyrated around a bit like a stripper at the Lollipop Lounge and just like the pros - promised a lot and delivered bugger all.
Personal feeling - commodities still look toppish and with the job numbers still showing no sign of a turnaround they seem to be looking like we could be about to start a second down-leg (particularly in the base metals and platinum). Gold and Oil still seem to be trading as something of a "risk" proxy.
There is some talk of the dollar starting to strengthen on the back of some prospects of rising interest rates in the US. The problem with interest rates going up is that its going to deaden any of these so called "green-shoots"...
No real conviction for direction tomorrow beyond expecting a bit of a rebound in gold.
Friday, June 5, 2009
Hahahah
Bizarre trading day - I'm still trying to catch my breath and survey what worked and what didn't.
I did however come across an article on Moneyweb and found a comment I thought really funny. The article was discussing how you shouldn't let fund managers look after your money (or sort of because it was an interview with a fund manager).
One of the comments underneath the article was:
"Advice from a six year old on the playground - Never let a dog look after your sandwiches - The same applies to managing your money"
Got a good chuckle out of that one. If you want to read the article, you can find it here.
I did however come across an article on Moneyweb and found a comment I thought really funny. The article was discussing how you shouldn't let fund managers look after your money (or sort of because it was an interview with a fund manager).
One of the comments underneath the article was:
"Advice from a six year old on the playground - Never let a dog look after your sandwiches - The same applies to managing your money"
Got a good chuckle out of that one. If you want to read the article, you can find it here.
Thursday, June 4, 2009
Friday trades
Only open trades at the moment are short copper and short platinum which I went into last night...
It all just looks a bit too toppish for me and expecting a bit of a commodities sell-off today.
Drifting in and out of oil at above 69.50 - think this has run a little too hard in the last few days - time for a breather.
Hard to call the markets with the BHP news giving a skew opening to the All Share... Will see..
It all just looks a bit too toppish for me and expecting a bit of a commodities sell-off today.
Drifting in and out of oil at above 69.50 - think this has run a little too hard in the last few days - time for a breather.
Hard to call the markets with the BHP news giving a skew opening to the All Share... Will see..
ALSI Trader
For the technical analysis and SA traders - add this blog to your links:
http://alsi-trader.blogspot.com/
Nice clear and concise blog for a South African context and always nice to bounce ideas off the other traders on this blog as well as the usual suspects from Page 88
http://alsi-trader.blogspot.com/
Nice clear and concise blog for a South African context and always nice to bounce ideas off the other traders on this blog as well as the usual suspects from Page 88
Wednesday, June 3, 2009
Trading tip
Trade with a clear conscience - if you have to get up to 2am to check what your trade is doing then you shouldn`t be in the position in the first place...
Unwound some of the dollar stuff
I have unwound some of the long dollar short yen positions I was in. Felt I was a little over-geared in the short term and there was some profit on the table so it was easier to walk away and try again another day.
Monday, June 1, 2009
Bet on the dollar
If you've been following me on Twitter you'll see I've been plugging my long Dollar | Yen position which has so far yielded some rewards.
The thinking behind this is four-fold.
1. There is the political instability around North Korea which is likely to lead to some volatility in the Asian markets (including presumably the currency markets)
2. As the economy (or more specifically the stock-market) has rebounded, there has been some flight from low yielding but perceived "safe" currencies such as the Yen into the Euro for its higher yield. I argue that the dollar sale has been overdone and in fact offers better value than the Euro.
3. While I still expect another market down-leg, the more the rally takes hold (particularly in the US) the more appetite there will be for the dollar - I don't see the currency alternative at the moment nor do I see something else that carries enough "size".
4. China, Japan and the rest of Asia all want the dollar to be strong relative to their currencies and logically they are not going to try and put some pressure on their own currencies to keep them weak relative to the dollar.
It is not a long term trading position - simply because I think there is too much volatility and earnings uncertainty everywhere but I think while everyone is keeping their eye on the Euro, I think the US dollar offers something a little different.
The thinking behind this is four-fold.
1. There is the political instability around North Korea which is likely to lead to some volatility in the Asian markets (including presumably the currency markets)
2. As the economy (or more specifically the stock-market) has rebounded, there has been some flight from low yielding but perceived "safe" currencies such as the Yen into the Euro for its higher yield. I argue that the dollar sale has been overdone and in fact offers better value than the Euro.
3. While I still expect another market down-leg, the more the rally takes hold (particularly in the US) the more appetite there will be for the dollar - I don't see the currency alternative at the moment nor do I see something else that carries enough "size".
4. China, Japan and the rest of Asia all want the dollar to be strong relative to their currencies and logically they are not going to try and put some pressure on their own currencies to keep them weak relative to the dollar.
It is not a long term trading position - simply because I think there is too much volatility and earnings uncertainty everywhere but I think while everyone is keeping their eye on the Euro, I think the US dollar offers something a little different.
Sunday, May 31, 2009
Liquid Trader on Twitter
I am assured by one of my journo mates that Twitter is the place to be if you want to "get noticed" so I've set up a presence on Twitter and accumulated a few followers.
Not sure about the whole Twitter lark but you can follow me at this address:
http://twitter.com/liquidtraderza
Not sure about the whole Twitter lark but you can follow me at this address:
http://twitter.com/liquidtraderza
Monday, May 25, 2009
Interesting times
Monday was a bit of a non event as far as trading went - neither the US nor the UK were open for trading so global markets were battling for direction of any kind.
However I thought that maybe the Memorial Day holidays in the US may provide us with a short-term trading opportunity. The Americans are quite big on these big patriotic holidays and on more than one occasion I've seen these "Patriot Rallys" where US markets go up seemingly because of national sentiment.
Did a bit of a Google search on the subject - specifically relating to Memorial Day - and I came up with this link which made for good reading (particularly if you're a stats or quants guy).
Used Monday to position myself with a couple of short term long trading positions on the Dow, S&P, Oil, JSE All Share Index, Naspers, AngloGold and Sasol. Yeah yeah its a bog-roll long list of pozzies but I'm comfortable with the spread.
I wanted MTN as well yesterday morning but the merger talk with Bharti moved the price too early and I couldn't get the entry I wanted.
The Oil trade hasn't yet gone totally to plan and is bouncing around just above my stop-loss but there seems to be some support at above US$59.50 which is keeping me in the game.
I don't believe this will be a particularly sustainable rally but I guess we try and take the opportunities when they look like they are there and if there are short-term profits available then we take it off the table.
However I thought that maybe the Memorial Day holidays in the US may provide us with a short-term trading opportunity. The Americans are quite big on these big patriotic holidays and on more than one occasion I've seen these "Patriot Rallys" where US markets go up seemingly because of national sentiment.
Did a bit of a Google search on the subject - specifically relating to Memorial Day - and I came up with this link which made for good reading (particularly if you're a stats or quants guy).
Used Monday to position myself with a couple of short term long trading positions on the Dow, S&P, Oil, JSE All Share Index, Naspers, AngloGold and Sasol. Yeah yeah its a bog-roll long list of pozzies but I'm comfortable with the spread.
I wanted MTN as well yesterday morning but the merger talk with Bharti moved the price too early and I couldn't get the entry I wanted.
The Oil trade hasn't yet gone totally to plan and is bouncing around just above my stop-loss but there seems to be some support at above US$59.50 which is keeping me in the game.
I don't believe this will be a particularly sustainable rally but I guess we try and take the opportunities when they look like they are there and if there are short-term profits available then we take it off the table.
Thursday, May 21, 2009
Go Gold go!
Absolutely loving this gold price action and pretty sure we've got clear air up to $970 before the end of the week. At this moment in time we're floating around the $953 mark and the only thing that hasn't played the game in terms of my AngloGold call has been the strong Rand. (or is that more specifically a weak dollar)
Still pretty confident that long ANG is a good place to be going into tomorrow.
Sasol was looking fine but dipped off today as the exchange rate strengthened and US markets sold down but still pretty happy with where we're at.
Looking forward to tomorrow, I reckon there is going to be plenty of short covering around gold as people pile in and technically I don't see the Rand / Dollar getting through the R8.20 mark to the dollar.... in fact I think there might be some hot money being pulled from emerging market currencies tomorrow...
Let's see ...
Still pretty confident that long ANG is a good place to be going into tomorrow.
Sasol was looking fine but dipped off today as the exchange rate strengthened and US markets sold down but still pretty happy with where we're at.
Looking forward to tomorrow, I reckon there is going to be plenty of short covering around gold as people pile in and technically I don't see the Rand / Dollar getting through the R8.20 mark to the dollar.... in fact I think there might be some hot money being pulled from emerging market currencies tomorrow...
Let's see ...
Monday, May 18, 2009
Hhhhmmm....
Honestly can't believe the strength of this rally - am I missing something
I took a couple of positions on Monday - long Sasol (SOL) @R294 and long AngloGold (ANG) R314 and then stuck in some wider reaching short positions.
Of course ANG promptly announced its bond issue and the share price took a bit of a smack beneath R300.
Interesting to see there is a bit of a buzz in the gold price despite the equity rally - we're sitting around between 920 and 930...
I took a couple of positions on Monday - long Sasol (SOL) @R294 and long AngloGold (ANG) R314 and then stuck in some wider reaching short positions.
Of course ANG promptly announced its bond issue and the share price took a bit of a smack beneath R300.
Interesting to see there is a bit of a buzz in the gold price despite the equity rally - we're sitting around between 920 and 930...
Saturday, May 16, 2009
Bizarre!
Last week was a bizarre trading week! I had taken quite a lot of short positions on local equities that just didn't pay-off.
The Rand didn't help - particularly with the crap from ICASA on the Vodacom deal - but still I'd have thought it was time to see a bit of profit-taking and a bit of a blow-off considering the economic data still doesn't look great.
The US job numbers look kak and are going to take a serious dent when the GM dealerships (1100 of them) start being closed down.
I see Gold has bounced above the 930 level which gives me the indication that we're about to start another down-leg for equities - something that gets me a little excited because I think many of the SA equities I've picked are trading on pretty undemanding values.
Bias has to be to the short-side methinks.
The Rand didn't help - particularly with the crap from ICASA on the Vodacom deal - but still I'd have thought it was time to see a bit of profit-taking and a bit of a blow-off considering the economic data still doesn't look great.
The US job numbers look kak and are going to take a serious dent when the GM dealerships (1100 of them) start being closed down.
I see Gold has bounced above the 930 level which gives me the indication that we're about to start another down-leg for equities - something that gets me a little excited because I think many of the SA equities I've picked are trading on pretty undemanding values.
Bias has to be to the short-side methinks.
Sunday, May 3, 2009
Binary options - news
Dunno if there are any South African day traders out there who have been looking for a way to participate in the action in the US automakers and banks but a mate of mine just SMS'd me an interesting piece of news...
... The Justrade binaries option trading platform has added contracts on Citi Group and Ford which could be a bit of fun to trade.
... The Justrade binaries option trading platform has added contracts on Citi Group and Ford which could be a bit of fun to trade.
Thursday, April 30, 2009
ETF's and portfolio construction
Portfolio construction for retail investors is oftened made out to be far more difficult and technical than it really needs to be.
I don't claim to be an expert on the subject by the stretch of anyones imagination - but I have got some thoughts around using ETF's that might be interesting for active South African retail investors trying to level out some of the volatility in their portfolio.
ETF's in my portfolio are (in my opinion) great for one reason - variety....
- Access to asset classes that are not normally open to retail investors (e.g. bonds)
- Access to markets that are not normally available to retail investors (Japan, US, World indices)
These are the ETF's that I've tried to blend into my portfolio:
DBXJP - Deutsche Bank Japan X-tracker
DBXWD - Deutsche Bank MSCI World Index
DBXUS - Deutsche Bank MSCI US Index
ZGOVI - Investec's government bond ETF
On top of that I'll add in the RMB / Bips Inflation-X product when it lists later this month.
My strategy at the moment is to mix in about 20% of these into my portfolio just to try and balance out the stock-picking and asset diversification.
It is a pretty cheap and easy way to balance out this risk - Anyone else using these tools for the same reason?
I don't claim to be an expert on the subject by the stretch of anyones imagination - but I have got some thoughts around using ETF's that might be interesting for active South African retail investors trying to level out some of the volatility in their portfolio.
ETF's in my portfolio are (in my opinion) great for one reason - variety....
- Access to asset classes that are not normally open to retail investors (e.g. bonds)
- Access to markets that are not normally available to retail investors (Japan, US, World indices)
These are the ETF's that I've tried to blend into my portfolio:
DBXJP - Deutsche Bank Japan X-tracker
DBXWD - Deutsche Bank MSCI World Index
DBXUS - Deutsche Bank MSCI US Index
ZGOVI - Investec's government bond ETF
On top of that I'll add in the RMB / Bips Inflation-X product when it lists later this month.
My strategy at the moment is to mix in about 20% of these into my portfolio just to try and balance out the stock-picking and asset diversification.
It is a pretty cheap and easy way to balance out this risk - Anyone else using these tools for the same reason?
BIPS INFLATION-X
This is a product I've been waiting for since I first got wind of it at the end of 2008 and I reckon it could be a really nice addition to any retail investors portfolio.
The product gets officially announced on Monday but basically Rand Merchant Bank and their "Bips" team have created an ETF product comprising four government-issued Inflation-Linked Bonds. Basically your real return on the proudct is inflation + 2.5%.
The reason this product is really interesting is that if you buy into the theory that the bailouts have created "un-natural" liquidity in the system, we're about to have a huge second bout of inflation hit the global economy.
When that comes in, many of your other investments will fail to grow or keep pace with inflation and this is one of the few "guaranteed" (I hate that word) ways in which you can continue to generate a positive return.
To me it is a "must-have" in your portfolio going forward and I'm definately going to be adding a few. The IPO for the product is next week and it will be listed on the 15th of May.
Just a thought - use it don't use it.
The product gets officially announced on Monday but basically Rand Merchant Bank and their "Bips" team have created an ETF product comprising four government-issued Inflation-Linked Bonds. Basically your real return on the proudct is inflation + 2.5%.
The reason this product is really interesting is that if you buy into the theory that the bailouts have created "un-natural" liquidity in the system, we're about to have a huge second bout of inflation hit the global economy.
When that comes in, many of your other investments will fail to grow or keep pace with inflation and this is one of the few "guaranteed" (I hate that word) ways in which you can continue to generate a positive return.
To me it is a "must-have" in your portfolio going forward and I'm definately going to be adding a few. The IPO for the product is next week and it will be listed on the 15th of May.
Just a thought - use it don't use it.
And so it goes...
How is this bloody rally! That's the only way I could start this post I'm afraid.
I'm not complaining - I went long last Thursday and so far I'm smiling all the way to the bank but geez it goes against everything I would believe fundamentally.
Somebody raised a good point yesterday which I think we should stick in the back of our heads - the US earnings in particular haven't been as bad as people were expecting largely because these businesses have been hacking costs at every turn primarily around staff..
Now you go into the next reporting season with a far higher unemployment figure. Having said THAT you then need to step back and ask yourself whether or not the current rally in the stock-markets has a lot to do with excess liquidity coming in from the bailout packages - has the idea of printing money to get us out of a recession actually worked... If it has then inflation is right around the corner....
... need to think about this a bit.
I'm not complaining - I went long last Thursday and so far I'm smiling all the way to the bank but geez it goes against everything I would believe fundamentally.
Somebody raised a good point yesterday which I think we should stick in the back of our heads - the US earnings in particular haven't been as bad as people were expecting largely because these businesses have been hacking costs at every turn primarily around staff..
Now you go into the next reporting season with a far higher unemployment figure. Having said THAT you then need to step back and ask yourself whether or not the current rally in the stock-markets has a lot to do with excess liquidity coming in from the bailout packages - has the idea of printing money to get us out of a recession actually worked... If it has then inflation is right around the corner....
... need to think about this a bit.
Thursday, April 23, 2009
Catchup
Hhhhhmmm these South African public holidays have really played havoc with any day-trading activities so I've had to spend my time on the "investment" side of my portfolio.
Added a few more PSG and ZGOVI's to my portfolio and I've also added Country Bird Holdings to my watchlist.
PSG
Was pretty happy with the results out of PSG and I'm quite liking the way that their companies are actively seeking acquisitions while others are heading for the hills. Check how nicely Capitec has done in recent weeks since their results came out.
Below R16, I've been adding a few more PSG to the portfolio.
I'm also watching PSG for some action around their Paladin subsidiary which has been steadily adding to its holding in Top Fix Holdings. (Not totally sure what the strategy is here, because I'd have thought there were better quality assets - but I guess we trust Jannie Mouton's judgement on all of this)
ZGOVI
I'll blog separately on my Exchange Traded Fund (ETF) strategy for my portfolio but I've continued to add these ZGOVI's to my portfolio for a bit of diversity into another asset class.
These things have held up quite nicely and coupled with their distribution, they've been worthwhile to hold through all this turmoil.
Pick 'n Pay / Pikwik
How good were those results out of Pick 'n Pay! I have a couple of Pikwik in my portfolio and those results mean I'll probably add a few more to my portfolio. Some success in Australia with the Franklins operation at last and good cash flows. Nice defensive option in the portfolio and with decent cash flows come decent dividends.
Altech / Altron
Altech released their financial results yesterday and they also looked good. As far as IT companies go, my pick would be Altech. However while I like the Altech story, I've actually been adding the Altron shares (wider power and infrastructure story as well as access to ALT) as well as the Altron prefs to my portfolio for some dividend yield.
Strategy
In terms of strategy, I'm still short equity and long gold (underlying and AngloGold).
I see China has just announced that they've bought a stack of Gold which has driven the price back above the 900 dollar mark.
Equities are still looking a little shaky in general and it would appear that Chrysler is going into bankruptcy protection in next few days. Stress tests out of the banks also due out today... gonna be interesting.
Added a few more PSG and ZGOVI's to my portfolio and I've also added Country Bird Holdings to my watchlist.
PSG
Was pretty happy with the results out of PSG and I'm quite liking the way that their companies are actively seeking acquisitions while others are heading for the hills. Check how nicely Capitec has done in recent weeks since their results came out.
Below R16, I've been adding a few more PSG to the portfolio.
I'm also watching PSG for some action around their Paladin subsidiary which has been steadily adding to its holding in Top Fix Holdings. (Not totally sure what the strategy is here, because I'd have thought there were better quality assets - but I guess we trust Jannie Mouton's judgement on all of this)
ZGOVI
I'll blog separately on my Exchange Traded Fund (ETF) strategy for my portfolio but I've continued to add these ZGOVI's to my portfolio for a bit of diversity into another asset class.
These things have held up quite nicely and coupled with their distribution, they've been worthwhile to hold through all this turmoil.
Pick 'n Pay / Pikwik
How good were those results out of Pick 'n Pay! I have a couple of Pikwik in my portfolio and those results mean I'll probably add a few more to my portfolio. Some success in Australia with the Franklins operation at last and good cash flows. Nice defensive option in the portfolio and with decent cash flows come decent dividends.
Altech / Altron
Altech released their financial results yesterday and they also looked good. As far as IT companies go, my pick would be Altech. However while I like the Altech story, I've actually been adding the Altron shares (wider power and infrastructure story as well as access to ALT) as well as the Altron prefs to my portfolio for some dividend yield.
Strategy
In terms of strategy, I'm still short equity and long gold (underlying and AngloGold).
I see China has just announced that they've bought a stack of Gold which has driven the price back above the 900 dollar mark.
Equities are still looking a little shaky in general and it would appear that Chrysler is going into bankruptcy protection in next few days. Stress tests out of the banks also due out today... gonna be interesting.
Tuesday, April 14, 2009
Interesting directors dealings
Two interesting directors dealings jumped out at me yesterday.
1. Grindrod - Ivan Clark sold R31m of ordinary shares in the shipping firm / diversified industrial company yesterday at R12.50... I know he had some big SSF positions open and some of those options had been exercised but I'm guessing that means he doesn't see much upside from these levels.
2. Country Bird Holdings - The chicken farmer / agri firm has seen two of its directors very active in the market in the market in the last few months since releasing its interim results in February.
The company is on a pretty undemanding price to earnings ratio of 5.2 and a pretty handy dividend and it also kind of fits in with the farming and food theme. Haven't taken a position either which way on it yet, but it would appear to be something to consider.
1. Grindrod - Ivan Clark sold R31m of ordinary shares in the shipping firm / diversified industrial company yesterday at R12.50... I know he had some big SSF positions open and some of those options had been exercised but I'm guessing that means he doesn't see much upside from these levels.
2. Country Bird Holdings - The chicken farmer / agri firm has seen two of its directors very active in the market in the market in the last few months since releasing its interim results in February.
The company is on a pretty undemanding price to earnings ratio of 5.2 and a pretty handy dividend and it also kind of fits in with the farming and food theme. Haven't taken a position either which way on it yet, but it would appear to be something to consider.
Goldmans
It was helluva interesting to watch the market response on Monday and Tuesday after Goldmans Sachs came out and announced it would be reporting a first quarter profit of US$1.8bn.
The market took initial heart from the announcement and then the overwhelming bad news and "reality" set in. Retail figures in the US were poor and that weighed on markets from the moment they came out.
Locally we had a pretty widespread rally with resource heavyweight Anglo American up over 5% and Old Mutual up 8%.... and the retail figures were my chance to take a couple of short-dated (10 day) puts on the local and international markets.
Dunno - think there is simply too much bad news for much more upside in the short term. Headlines from Bloomberg this morning:
The market took initial heart from the announcement and then the overwhelming bad news and "reality" set in. Retail figures in the US were poor and that weighed on markets from the moment they came out.
Locally we had a pretty widespread rally with resource heavyweight Anglo American up over 5% and Old Mutual up 8%.... and the retail figures were my chance to take a couple of short-dated (10 day) puts on the local and international markets.
Dunno - think there is simply too much bad news for much more upside in the short term. Headlines from Bloomberg this morning:
- Cathay Pacific Said to Ask Workers to Take Unpaid Leave to Help Cut Costs
- Fiji Devalues Currency by 20% After Military Takes Power, Judiciary Sacked
- Australia's Banks Face `Headwinds' as Economy Slows, CLSA's Johnson Says
- North Korea Expels Nuclear Inspectors Following UN Condemnation of Launch
- Bangkok Enters Fourth Day of Emergency Rule as Police Seek Protest Leaders
- Intel Profit Declines 55% on Falling Chip Demand
Wednesday, April 8, 2009
Fascinating
It's been a fascinating couple of weeks in the market. Biggish rally which seems to have sucked in a lot of people seeking some relief from the constant selling pressure and suddenly the downside has "re-emerged".
Somebody made a good point though - last week was the end of the first quarter reporting period for unit trusts so while I'm sure they will deny it there must have been some "padding" going on.
Didn't really do much with the rally but rather elected to sit on the sidelines. The only thing I bought was a few more shares in Zeder to satisfy my farming fetish. Their results came out recently and weren't too shabby and I see I'm basically getting a 5% dividend yield from them (at R1.35) so I can't complain too much.
The unlisted investments are valued at R1.92 which looks like you get them at a pretty deep discount if you follow the rights issue at R1.35.
Anyway - watching the US market yesterday and rest of global markets today, the sell-off trend seems to be back. It looks like we've got two things to watch now which are likely to weigh on the markets going forward:
Credit card debt: In the US credit-card debt rose to 8.82 percent in February, the most in the 20 years that Moody’s Investors Service Inc. has kept records. Moody’s cited higher unemployment and forecast so-called charge-offs will exceed 10 percent by the end of the year.
As credit cards tighten remember the pressure this is going to have on retailers who depend on credit based sales... This is a very real problem and its coming to your doorstep...
CDS defaults rate on the up: Credit Default Swap default rates are on the up again which adds fuel to my thought that the rally may have suckered in a few more people.
Remember that this rate went up sharply when the "smart money" decided to start taking some collateral just before the October crash.... If this is on the up again then tread warily...
Autos
The auto companies are an interesting one... I think that while people accept that Chrysler and GM are effectively about to go into "prepared" bankruptcy I think the actual "shock" to the system will send shudders through the US markets.
Looking at the data, experts are predicting that GM will go down in the next 2 - 3 weeks...
Wouldn't be particularly long in this market I'm afraid.
Somebody made a good point though - last week was the end of the first quarter reporting period for unit trusts so while I'm sure they will deny it there must have been some "padding" going on.
Didn't really do much with the rally but rather elected to sit on the sidelines. The only thing I bought was a few more shares in Zeder to satisfy my farming fetish. Their results came out recently and weren't too shabby and I see I'm basically getting a 5% dividend yield from them (at R1.35) so I can't complain too much.
The unlisted investments are valued at R1.92 which looks like you get them at a pretty deep discount if you follow the rights issue at R1.35.
Anyway - watching the US market yesterday and rest of global markets today, the sell-off trend seems to be back. It looks like we've got two things to watch now which are likely to weigh on the markets going forward:
Credit card debt: In the US credit-card debt rose to 8.82 percent in February, the most in the 20 years that Moody’s Investors Service Inc. has kept records. Moody’s cited higher unemployment and forecast so-called charge-offs will exceed 10 percent by the end of the year.
As credit cards tighten remember the pressure this is going to have on retailers who depend on credit based sales... This is a very real problem and its coming to your doorstep...
CDS defaults rate on the up: Credit Default Swap default rates are on the up again which adds fuel to my thought that the rally may have suckered in a few more people.
Remember that this rate went up sharply when the "smart money" decided to start taking some collateral just before the October crash.... If this is on the up again then tread warily...
Autos
The auto companies are an interesting one... I think that while people accept that Chrysler and GM are effectively about to go into "prepared" bankruptcy I think the actual "shock" to the system will send shudders through the US markets.
Looking at the data, experts are predicting that GM will go down in the next 2 - 3 weeks...
Wouldn't be particularly long in this market I'm afraid.
Friday, April 3, 2009
Hahaha
Good for a bit of a laugh:
Doctors' Opinion of Financial Bail Out Package
The Allergists voted to scratch it, and the Dermatologists advised not to make any rash moves.
The Gastroenterologists had sort of a gut feeling about it, but the Neurologists thought the
Administration had a lot of nerve, and the Obstetricians felt they were all laboring under a misconception.
The Ophthalmologists considered the idea shortsighted.
The Pathologists yelled, 'Over my dead body!' while the Pediatricians said, 'Oh, Grow up!'
The Psychiatrists thought the whole idea was madness, the Radiologists could see right through it,
and the Surgeons decided to wash their hands of the whole thing.
The Internists thought it was a bitter pill to swallow, and the Plastic Surgeons said,
'This puts a whole new face on the matter.'
The Podiatrists thought it was a step forward, but the Urologists felt the scheme wouldn't hold water.
The Anesthesiologists thought the whole idea was a gas, and the Cardiologists didn't have the heart to say no.
In the end, the Proctologists left the decision up to some assholes in Washington .
Doctors' Opinion of Financial Bail Out Package
The Allergists voted to scratch it, and the Dermatologists advised not to make any rash moves.
The Gastroenterologists had sort of a gut feeling about it, but the Neurologists thought the
Administration had a lot of nerve, and the Obstetricians felt they were all laboring under a misconception.
The Ophthalmologists considered the idea shortsighted.
The Pathologists yelled, 'Over my dead body!' while the Pediatricians said, 'Oh, Grow up!'
The Psychiatrists thought the whole idea was madness, the Radiologists could see right through it,
and the Surgeons decided to wash their hands of the whole thing.
The Internists thought it was a bitter pill to swallow, and the Plastic Surgeons said,
'This puts a whole new face on the matter.'
The Podiatrists thought it was a step forward, but the Urologists felt the scheme wouldn't hold water.
The Anesthesiologists thought the whole idea was a gas, and the Cardiologists didn't have the heart to say no.
In the end, the Proctologists left the decision up to some assholes in Washington .
Monday, March 30, 2009
Over....
I guess this means that the rally is over...??
Looking over at the Dow in the US it's "blood on the trading screens" with the heavyweight industrial index down over 320 points....
It's funny - it didn't matter how many people you spoke to in the last week or so, almost everybody was cautioning against being sucked into this rally... and yet people couldn't help but chase the "hope".
I'm guessing we're going to see a sub-7000 Dow this week as reality starts to sink in again about how tough things are out there. My feeling is that today was the death knell for General Motors (and probably Chrysler as well)... although I have no idea how Ford is managing to stay alive in these markets.
Having said that, I don't think South African equities are particularly expensive and I guess doing a bit of stock-picking should pay-off in the next few years from these levels.
Two stocks I've blogged on before, remain popular in my tiny investment universe - namely Interwaste and Zeder.
Interwaste
Interwaste is a waste-management firm and the only way for SA investors to gain exposure to this lucrative sector in the listed space. The company reported its full year results to December 2008, and a much better performance. I looked specifically at the cash flow from operations and I reckon this free cash-flow indicates some dividends could be on the cards in the next few months.
Remember also that management remain sizeable shareholders in the business and that will probably mean that they'd like to push for dividends as well out of their investment.
Zeder
This agricultural operation has announced that they will be going ahead with a rights issue at 135c a share, in the next few months. The company says it sees a number of opportunities and it is raising cash to take advantage of them.
Zeder is trading on an historic PE of 6 in a relatively defensive sector, especially with its large stakes in KWV and Pioneer.
Think there is merit in adding to these two positions.
Looking over at the Dow in the US it's "blood on the trading screens" with the heavyweight industrial index down over 320 points....
It's funny - it didn't matter how many people you spoke to in the last week or so, almost everybody was cautioning against being sucked into this rally... and yet people couldn't help but chase the "hope".
I'm guessing we're going to see a sub-7000 Dow this week as reality starts to sink in again about how tough things are out there. My feeling is that today was the death knell for General Motors (and probably Chrysler as well)... although I have no idea how Ford is managing to stay alive in these markets.
Having said that, I don't think South African equities are particularly expensive and I guess doing a bit of stock-picking should pay-off in the next few years from these levels.
Two stocks I've blogged on before, remain popular in my tiny investment universe - namely Interwaste and Zeder.
Interwaste
Interwaste is a waste-management firm and the only way for SA investors to gain exposure to this lucrative sector in the listed space. The company reported its full year results to December 2008, and a much better performance. I looked specifically at the cash flow from operations and I reckon this free cash-flow indicates some dividends could be on the cards in the next few months.
Remember also that management remain sizeable shareholders in the business and that will probably mean that they'd like to push for dividends as well out of their investment.
Zeder
This agricultural operation has announced that they will be going ahead with a rights issue at 135c a share, in the next few months. The company says it sees a number of opportunities and it is raising cash to take advantage of them.
Zeder is trading on an historic PE of 6 in a relatively defensive sector, especially with its large stakes in KWV and Pioneer.
Think there is merit in adding to these two positions.
Wednesday, March 25, 2009
Dying dollar?
I know it is something we blogged about a while back and I see it has just become very topical again.
Here is a piece from Reuters which I found quite intriguing:
China eyes SDR as global currency to replace dollar
* China proposes sweeping overhaul of world monetary system
* IMF's special drawing right could replace dollar over time
* Advantage would be greater stability, fewer crises
BEIJING, March 23 (Reuters) - China's central bank chief on Monday proposed a sweeping overhaul of the global monetary system, outlining how the dollar could eventually be replaced as the world's main reserve currency by the Special Drawing Right.
The SDR is an international reserve asset created by the International Monetary Fund in 1969 that has the potential to act as a super-sovereign reserve currency, Zhou Xiaochuan, governor of the People's Bank of China, said in remarks published on Monday on the bank's website, www.pbc.gov.cn.
"The role of the SDR has not been put into full play due to limitations on its allocation and the scope of its uses. However, it serves as the light in the tunnel for the reform of the international monetary system," Zhou said.
Zhou did not refer directly to the dollar.
But his speech, issued in English as well as Chinese, spells out in detail Beijing's dissatisfaction with the primacy of the U.S. currency, which Zhou says has led to increasingly frequent international financial crises since the collapse of the Bretton Woods system of fixed but adjustable exchange rates in 1971.
"The price is becoming increasingly high, not only for the users, but also for the issuers of the reserve currencies. Although crisis may not necessarily be an intended result of the issuing authorities, it is an inevitable outcome of the institutional flaws," Zhou said.
"The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies," he added.
FEWER RISKS
A super-sovereign reserve currency not only eliminates the risks inherent in a credit-based currency such as the dollar -- in contrast to one backed by gold -- but also makes it possible to manage global liquidity, Zhou argued.
"And when a country's currency is no longer used as the yardstick for global trade and as the benchmark for other currencies, the exchange rate policy of the country would be far more effective in adjusting economic imbalances. This will significantly reduce the risks of a future crisis and enhance crisis management capability." he said.
Reform of the international monetary system is likely to take a back seat to the more pressing task of economic and financial stabilization when leaders of the Group of 20 developed and emerging economies meet in London on April 2.
But Zhou's speech shows that the issue is a pressing one for China, whose top officials regularly bemoan the volatility of the dollar and what they see as mismanagement of the world's leading economy.
Zhou acknowledged that establishing a new reserve currency that commands wide acceptance may take a long time. It would be a "bold initiative that requires extraordinary political vision and courage".
Here is a piece from Reuters which I found quite intriguing:
China eyes SDR as global currency to replace dollar
* China proposes sweeping overhaul of world monetary system
* IMF's special drawing right could replace dollar over time
* Advantage would be greater stability, fewer crises
BEIJING, March 23 (Reuters) - China's central bank chief on Monday proposed a sweeping overhaul of the global monetary system, outlining how the dollar could eventually be replaced as the world's main reserve currency by the Special Drawing Right.
The SDR is an international reserve asset created by the International Monetary Fund in 1969 that has the potential to act as a super-sovereign reserve currency, Zhou Xiaochuan, governor of the People's Bank of China, said in remarks published on Monday on the bank's website, www.pbc.gov.cn.
"The role of the SDR has not been put into full play due to limitations on its allocation and the scope of its uses. However, it serves as the light in the tunnel for the reform of the international monetary system," Zhou said.
Zhou did not refer directly to the dollar.
But his speech, issued in English as well as Chinese, spells out in detail Beijing's dissatisfaction with the primacy of the U.S. currency, which Zhou says has led to increasingly frequent international financial crises since the collapse of the Bretton Woods system of fixed but adjustable exchange rates in 1971.
"The price is becoming increasingly high, not only for the users, but also for the issuers of the reserve currencies. Although crisis may not necessarily be an intended result of the issuing authorities, it is an inevitable outcome of the institutional flaws," Zhou said.
"The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies," he added.
FEWER RISKS
A super-sovereign reserve currency not only eliminates the risks inherent in a credit-based currency such as the dollar -- in contrast to one backed by gold -- but also makes it possible to manage global liquidity, Zhou argued.
"And when a country's currency is no longer used as the yardstick for global trade and as the benchmark for other currencies, the exchange rate policy of the country would be far more effective in adjusting economic imbalances. This will significantly reduce the risks of a future crisis and enhance crisis management capability." he said.
Reform of the international monetary system is likely to take a back seat to the more pressing task of economic and financial stabilization when leaders of the Group of 20 developed and emerging economies meet in London on April 2.
But Zhou's speech shows that the issue is a pressing one for China, whose top officials regularly bemoan the volatility of the dollar and what they see as mismanagement of the world's leading economy.
Zhou acknowledged that establishing a new reserve currency that commands wide acceptance may take a long time. It would be a "bold initiative that requires extraordinary political vision and courage".
Thursday, March 12, 2009
Hahahhahaha another take on sub-prime
"Heidi is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).
Word gets around and as a result increasing numbers of customers flood into Heidi’s bar.
Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit.
He sees no reason for undue concern since he has the debts of the alcoholics as collateral.
At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed.
Nevertheless, as their prices continuously climb, the securities become top-selling items.
One day, although the prices are still climbing, a risk manager (subsequently of course fired due his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar.
However they cannot pay back the debts.
Heidi cannot fulfil her loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.
The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation.
Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.
The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.
The funds required for this purpose are obtained by a tax levied on the non-drinkers."
Word gets around and as a result increasing numbers of customers flood into Heidi’s bar.
Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit.
He sees no reason for undue concern since he has the debts of the alcoholics as collateral.
At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed.
Nevertheless, as their prices continuously climb, the securities become top-selling items.
One day, although the prices are still climbing, a risk manager (subsequently of course fired due his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar.
However they cannot pay back the debts.
Heidi cannot fulfil her loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.
The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation.
Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.
The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.
The funds required for this purpose are obtained by a tax levied on the non-drinkers."
Monday, March 9, 2009
Going farming
It is damn tricky to make any money trading in this environment so I guess sticking to simple strategies is probably the best way to try and accumulate wealth while the world is tumbling around you.
Somebody asked me the other day why I am buying equities in a market that continues falling.
That's easy
1. Nobody can pick the bottom to the cycle. We've seen huge sell-offs and maybe we will see more losses but I think that we're getting to a point where some of the good SA businesses are starting to offer some value.
2. I am young enough that I need some kind of long term nest-egg and forced savings method to ensure I'm not blowing what I have grown. If I depend on monthly salary cheques or income from my businesses and I blow all of that, then in reality I am going backwards. By sticking some money into quality, income generating stocks trading well below their NAV I am creating a type of forced savings to carry me through that I won't be tempted to dip into.
Good old Jim Rogers was on Bloomberg yesterday and he said that he reckons it will be the farmers driving the Lamborghini's in the coming years and that kind of ties in with some of my thinking that farming and agriculture are going to be great places to invest over the next few years. I've got a few shares in Zeder - who announced a pretty interesting deal yesterday with KWV - and I'm planning to add to the Pioneer Food Group shares in my portfolio as well as look at adding Crookes Brothers as well.
Otherwise, selling pressure remains constant in the US and the Nikkei bounced off intra-day lows.
Somebody asked me the other day why I am buying equities in a market that continues falling.
That's easy
1. Nobody can pick the bottom to the cycle. We've seen huge sell-offs and maybe we will see more losses but I think that we're getting to a point where some of the good SA businesses are starting to offer some value.
2. I am young enough that I need some kind of long term nest-egg and forced savings method to ensure I'm not blowing what I have grown. If I depend on monthly salary cheques or income from my businesses and I blow all of that, then in reality I am going backwards. By sticking some money into quality, income generating stocks trading well below their NAV I am creating a type of forced savings to carry me through that I won't be tempted to dip into.
Good old Jim Rogers was on Bloomberg yesterday and he said that he reckons it will be the farmers driving the Lamborghini's in the coming years and that kind of ties in with some of my thinking that farming and agriculture are going to be great places to invest over the next few years. I've got a few shares in Zeder - who announced a pretty interesting deal yesterday with KWV - and I'm planning to add to the Pioneer Food Group shares in my portfolio as well as look at adding Crookes Brothers as well.
Otherwise, selling pressure remains constant in the US and the Nikkei bounced off intra-day lows.
Monday, March 2, 2009
Going long
Geez another rout on stock markets yesterday and the Dow Jones went below our 6800 target briefly closing at 6763 points down 299 points.
Big news of the day on the international front was that AIG reported a US$62bn loss for the quarter and on the local front the speculation is running riot (For the nth time!) that Old Mutual will offload their Nedbank stake.
What was interesting though was that despite the rout on US equity markets, the Alsi only moved down 0.43% and at this very moment in time the Nikkei has given up only 49 points and at one stage was threatening to go green. While the US takes the pain the rest of the world seems to be taking a back-seat ... a chance to look for a short term bounce?
I started going long in late trade on Monday, pretty much across the board.
You're probably thinking I'm a little loco going out on a limb here and going long but I think one has to stick to their convictions in some instances - I said 6800 was close enough to my short-term "low".
Also watching the Rand / Dollar exchange rate, I think this is where the kicker is going to come from over the next few days. The Rand slipped to R10.50 to the dollar and there doesn't seem to be too many reasons for it to go stronger either. I wouldn't be surprised if it fell to R11 to the dollar by the end of the week and that will provide a bit of upward momentum for our index - particularly if international markets take a bit of a breather...
Will see how it plays out
Big news of the day on the international front was that AIG reported a US$62bn loss for the quarter and on the local front the speculation is running riot (For the nth time!) that Old Mutual will offload their Nedbank stake.
What was interesting though was that despite the rout on US equity markets, the Alsi only moved down 0.43% and at this very moment in time the Nikkei has given up only 49 points and at one stage was threatening to go green. While the US takes the pain the rest of the world seems to be taking a back-seat ... a chance to look for a short term bounce?
I started going long in late trade on Monday, pretty much across the board.
- Long Gold
- Long Sasol
- Long Old Mutual (yeah yeah I know.... but there results are coming out so its worth a punt)
- Long Absa
- Long Remgro
You're probably thinking I'm a little loco going out on a limb here and going long but I think one has to stick to their convictions in some instances - I said 6800 was close enough to my short-term "low".
Also watching the Rand / Dollar exchange rate, I think this is where the kicker is going to come from over the next few days. The Rand slipped to R10.50 to the dollar and there doesn't seem to be too many reasons for it to go stronger either. I wouldn't be surprised if it fell to R11 to the dollar by the end of the week and that will provide a bit of upward momentum for our index - particularly if international markets take a bit of a breather...
Will see how it plays out
Sunday, March 1, 2009
Fools rush in
I've been thinking quite a lot about this idea of a "bottom" to the stockmarket.
Logic says you can't pick a bottom and I can accept that, but I also get the sense that market in the short term is tired of all the red.
Many professional traders have been slaughtered in the last few months, institutional investors are forced to keep a certain percentage of their holdings in shares (even if the prices keep declining) and particularly if you look at the South African equity scene I reckon a big chunk of the hot money - the offshore investment funds - have been pulled out of our market.
For my own thinking I've pegged the Dow as falling to between 6500 and 6800. At the moment we're at 7000. Index weighting issues aside, the 7000 level looks pretty tough to break and I wouldn't be surprised to see a bit of a bounce this week.
The banks locally were flushed out on Friday and I suspect we'll get a bit of a relief rally this week. While I don't think the South African banks have seen the worst of it in terms of bad debts, they still remain super-profitable and paying dividends.
Taking a short term view (Close of trade on Friday) - I've taken the following positions:
- Small long positions on Absa, First Rand and Standard Bank
- Small long position Remgro
- Gold to finish above US$950 this week
While I still remain pretty negative about the outlook for equity markets over the next six months, I believe shares are starting to get pretty close to levels where we can absorb some earnings declines from previous high levels.
Let me emphasise one thing though - while we may be getting to the point where local equity markets are looking at historically attractive levels, that doesn't mean they're going up now... that I suspect is still going to take some time (at least the rest of 2009) before people start putting their toes back in the water.
Remember though that we still have an election to get through and plenty of job cuts to come into the system.
Only fools rush in.
Obviously things can change in the blink of an eye so tight stops might be recommended on the above (except perhaps the gold call), but lets see how Monday and Tuesday play out first...
Logic says you can't pick a bottom and I can accept that, but I also get the sense that market in the short term is tired of all the red.
Many professional traders have been slaughtered in the last few months, institutional investors are forced to keep a certain percentage of their holdings in shares (even if the prices keep declining) and particularly if you look at the South African equity scene I reckon a big chunk of the hot money - the offshore investment funds - have been pulled out of our market.
For my own thinking I've pegged the Dow as falling to between 6500 and 6800. At the moment we're at 7000. Index weighting issues aside, the 7000 level looks pretty tough to break and I wouldn't be surprised to see a bit of a bounce this week.
The banks locally were flushed out on Friday and I suspect we'll get a bit of a relief rally this week. While I don't think the South African banks have seen the worst of it in terms of bad debts, they still remain super-profitable and paying dividends.
Taking a short term view (Close of trade on Friday) - I've taken the following positions:
- Small long positions on Absa, First Rand and Standard Bank
- Small long position Remgro
- Gold to finish above US$950 this week
While I still remain pretty negative about the outlook for equity markets over the next six months, I believe shares are starting to get pretty close to levels where we can absorb some earnings declines from previous high levels.
Let me emphasise one thing though - while we may be getting to the point where local equity markets are looking at historically attractive levels, that doesn't mean they're going up now... that I suspect is still going to take some time (at least the rest of 2009) before people start putting their toes back in the water.
Remember though that we still have an election to get through and plenty of job cuts to come into the system.
Only fools rush in.
Obviously things can change in the blink of an eye so tight stops might be recommended on the above (except perhaps the gold call), but lets see how Monday and Tuesday play out first...
Saturday, February 28, 2009
Binary Options Continued
I know I blogged about it recently but one of my mates had some success with Binary Options yesterday so I thought I'd add his feedback here so that you can make your own decisions.
He basically elected to use the Justrade.com platform and he committed 300 bucks. In two hours of trading he managed to turn it into R670 so he's pretty pleased with it. In terms of the stocks he traded he had REM, FSR and ASA
Apparently he got very lucky in the auction though with a lot of the profits coming from FSR in a last minute trade which made his main profits.
His main concern though was there were insufficient market participants and basically he scalped the market maker at the end. Hopefully this will change as the offering goes along...
... heck maybe I'll even sign up for them one of these days.
He did grumble that the contracts were dated a little too far in advance for such an illiquid market - i.e. the strikes were too far out to generate trade in them - think he said they were priced a week in advance - but a nice profit meant he wasn't moaning too much... plus I think he said the trades were something ridiculous like R1.50 a match which seems really cheap - but if it floats your boat then I guess you can take it...
Anyway that's my public service announcement for the day....
He basically elected to use the Justrade.com platform and he committed 300 bucks. In two hours of trading he managed to turn it into R670 so he's pretty pleased with it. In terms of the stocks he traded he had REM, FSR and ASA
Apparently he got very lucky in the auction though with a lot of the profits coming from FSR in a last minute trade which made his main profits.
His main concern though was there were insufficient market participants and basically he scalped the market maker at the end. Hopefully this will change as the offering goes along...
... heck maybe I'll even sign up for them one of these days.
He did grumble that the contracts were dated a little too far in advance for such an illiquid market - i.e. the strikes were too far out to generate trade in them - think he said they were priced a week in advance - but a nice profit meant he wasn't moaning too much... plus I think he said the trades were something ridiculous like R1.50 a match which seems really cheap - but if it floats your boat then I guess you can take it...
Anyway that's my public service announcement for the day....
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